Didn't expect a turnaround so quickly: SpiceJet chief Ajay Singh

The airline had a net profit of Rs 71.8 cr in Q1 of 2015-16 against a loss of Rs 124 cr in the same period last year

After a second consecutive profitable quarter, SpiceJet Chairman and Managing Director Ajay Singh said the profit margin could have been even higher if a weak foreign exchange and airline’s wet lease operations wouldn’t have come into play. However, he said he didn’t expect a turnaround “so quickly”.

“SpiceJet has done reasonably well. Given the fact that there was a weak rupee and the wet lease operations tend to be more expensive – both impacted the profitability. Profits should have been higher,” Singh said at a press conference in New Delhi.



The company said wet-lease aircraft were taken up to address the short-term capacity shortage arising out of aircraft unavailability and to rebuild the network as quickly as possible. The company expects to replace them with dry-lease aircraft in the coming months, Singh said.

The low-cost carrier reported a net profit of Rs 71.8 crore in the first quarter of 2015-16 against a loss of Rs 124 crore in same period last year. The airline said it is the highest ever Q1 profitability in its history. The airline had swung into profit in last quarter of 2014-15 after six quarters of losses.



The results assume significance as the airline had faced severe crisis last year and was on the verge of shutdown. Singh stepped in and brought back stakes in the airline.

 

“We didn’t expect the company, in terms of operations, will turn around so quickly. There will be further investment in the company linked to its growth…There is no paucity of capital. We will decide the timings based on our requirement,” said Singh.

Singh said the decrease in the aviation fuel prices was another contributing factor. “(We got) significant assistance from reducing oil prices,” he said. He added the airline’s challenge would be to address the cost of the airlines other than fuel.

The airline reported a load factor of 89.8 per cent in this quarter -- an increase by over 14 per cent from the same period last year. This happened despite almost a dozen promotional fares launched by the airline since last few months. "The promotion sales have not led to reduction in the airfares of the industry. We did it smartly," Singh said.



Without taking names, Singh said the airline is “continuing talks with foreign airlines on possible areas of operation” in SpiceJet. However, he clarified there is no intention of offloading his own stakes.

Qatar Airways denied in a statement that it is in talks with SpiceJet to buy stakes in the airline amid news reports. "This release is to confirm that Qatar Airways is not in talks to pursue a commercial stake in SpiceJet. There is no interest from the airline to engage in a partnership with the Gurgaon-based airline," the Doha-based carrier said in a statement. It, however, added that the only airline it is talking to is the Indian carrier Indigo. An e-mail query sent to Indigo didn?t elicit an immediate response.