SpiceJet Q1 profit up 18% on higher fares

SpiceJet Ltd, India’s second largest low-fare airline, said its first quarter profit for the current fiscal rose 18% on higher fares and better seat occupancy.

Net profit rose to ₹175.2 crore in the three months ended June 30, from ₹149 crore in the last fiscal, the airline said on Thursday.

Revenue rose 22.4% to ₹1,889.46 crore from ₹1,543.96 crore in the year-ago period.

“This is the first time we have seen a reverse swing where fares grew,” chief financial officer Kiran Koteshwar said, referring to the trend prevailing in the past few quarters of falling fares.

Fares rose 9% in the quarter from a year ago. The airline’s average realisation per passenger rose to ₹3,943 from ₹3,601.

Fuel prices, however, rose to ₹38 a litre on average this year from ₹33 a litre in the year earlier. This led to a 4% increase in cost per available seat kilometer to ₹3.75 from ₹3.59.

The airline was also able to generate more ancillary revenue from items such as food sales and seat selection, making up 12% of total revenue as compared to 2% in the year earlier.

The airline, which has 55 planes in its fleet and a 13% share of the domestic market, launched regional flights under the government’s Udan scheme.

“We had an eventful quarter as we took off under the Udan scheme and launched operations on two routes,” said Ajay Singh, chairman and managing director, SpiceJet who turned around the airline from a near shut down in 2015.

The airline will expand its fleet to 39 Boeing planes and 22 Bombardier Q400s by the calender year end, from 35 Boeing planes and 20 Q400 planes at the end of June.

SpiceJet also plans to add nine Boeing 737s and six Q400s in 2018.

SpiceJet said a lot of demand was coming from Tier-II cities such as Amritsar, Chandigarh, Ahmedabad, Pune, and Surat, and that it was not worried about rival airlines introducing regional flights.

“We have a superior plane and we have the first-mover advantage with 20 planes already in that market, plus there is so much growth,” Koteshwar said.

The airline currently has about Rs350 crore of cash.

The SpiceJet stock fell 5.18% on BSE to ₹119.05 on Thursday.