 "SpiceJet flies high in Q1, posts net profit of Rs 149 crore")
No-frills airline SpiceJet’s net profit more than doubled to Rs 149 crore in the three months to June, helped by increase in passenger load, higher operational efficiency and lower fuel price.
This is a sixth straight profitable quarter for the country’s second-largest low-cost airline. The company had reported a profit of Rs 73 crore in the year-ago quarter. Revenue rose 35 per cent to Rs 1,521.52 crore in the quarter, compared to Rs 1,113.00 crore in the corresponding quarter last year.
Buoyed by improved performance, the airline is increasing its fleet size by adding three Boeing 737-800 by November. The airline has already announced plans to add three Q400 to its fleet, to be deployed in northeastern region. This quarter, the airline increased its capacity deployment by 37 per cent.
“Lack of cancellation, reliability and the brand are reflecting in better load factor and on-time performance (OTP),” said Ajay Singh, chairman & managing director, SpiceJet.
The airline recorded a passenger load factor of 92.5 per cent this quarter. The airline said OTP had improved significantly this quarter and is likely to get better next quarter, as it has converted all its seven wet lease contracts into dry lease. “This will significantly improve efficiency and bring down costs,” said Singh.
“We decided to use the financial cushion to clear all debts and legacy issues. Every single legacy issue has been addressed and accounted for in this quarter,” said Singh, adding, “We have also provided for every single claim on the company’s books. Except three, all claims have been settled.”
The airline saw a change of guard after it had landed in financial trouble, leading to grounding of flights. The total revenue went up by 10 per cent to Rs 1,474.98 crore, against Rs 791 crore in the same period last year.
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Expenses increased sharply, with fuel cost at Rs 399.67 crore this quarter, against Rs 358.88 crore last year - an increase of 11 per cent. On the back of high fuel cost, total expenses increased by 33 per cent to Rs 1,374.04 crore, against Rs 1,032.22 crore.
Singh though said profitability was impacted due to rupee depreciation and lower fares due to overcapacity in the market. “Overcapacity is a huge problem, fares should be at least 20 per cent more,” he said. For SpiceJet, the average fare was down three per cent, compared to last quarter.
SpiceJet increased its unit revenue through a consistent rise in load factor, on lower fares and promotion offers. The management said the airline was planning to expand capacity, by adding more than 100 aircraft by the end of this financial year (FY17).
At the Ebitda (earnings before interest, taxes, depreciation and amortisation) level, SpiceJet reported a profit of Rs 215 crore this quarter.
The airline is likely to add 150 aircraft by FY17. “We are very close to giving the order and will finalise it soon,” said Singh.