SpiceJet posts first loss in 14 quarters on higher costs

Airline reports a loss of ₹38.06 crore on a revenue of ₹2,270.81 crore

MUMBAI:No frills carrier SpiceJet on Tuesday reported loss of ₹38.06 crore in the three months ended June 2018, for the first time in the past fourteen quarters. In the year-ago period it had posted profit of ₹46.1 crore.

SpiceJet, run by entrepreneur Ajay Singh, said the losses were on the back of higher costs, foreign exchange losses, and a onetime provisioning under an arbitration order.

The airline said that it had incurred additional expenses of ₹203 crore due to the rise in the cost of aviation turbine fuel (ATF) and ₹44 crore for forex losses, compared to the corresponding period of the previous year.

The airline’s revenue stood at ₹2,270.81 crore in the June quarter, up from ₹1,886.34 crore in the year-ago quarter.

A Bloomberg poll of five brokerages had estimated SpiceJet to report net profit of ₹103.80 crore on the back of its revenue growth. However, the airline’s expenses rose to ₹2,245.40 crore from ₹1,711.11 crore during the period under consideration.

“The company has taken a provision of ₹63.5 crore as an exceptional item on account of an arbitration award that cited interest payable of ₹92.5 crore and interest receivable of ₹29 crore for SpiceJet,” the airlines said in a statement, adding: “With this one time provision, SpiceJet has now fully provided for the maximum amount that may be payable under the arbitration award.”

SpiceJet also accounted for ₹51 crore as forex losses, which include the provisioning of ₹25.2

PROFIT IN THE THREE MONTHS THROUGH JUNE FELL 97% TO ₹27.79 CRORE FROM ₹811.14 CRORE A YEAR EARLIER

crore in forex revaluation due to depreciating rupee.

The last two quarters have seen listed Indian airlines reeling under higher jet fuel prices and a depreciating rupee. IndiGo, the largest domestic player in terms of passenger volume, reported its biggest-ever drop in profit since November 2015, despite higher passenger traffic.

Profit in the three months through June fell 97% to ₹27.79 crore, from ₹811.14 crore a year earlier. On 10 August, Jet Airways deferred the announcement of its June quarter results, saying that the chairman of the audit committee had informed the board that the management needed further time to finalize the accounts. A Jet Airways spokesperson said the date of the announcement will be notified soon.

SpiceJet recorded a 94.53% average domestic load factor, a measure of capacity utilization, for the April-June quarter, and clocked the highest passenger load factor among Indian airlines.

“SpiceJet has delivered yet another operational profitable quarter despite surging oil prices and a weak rupee,” said SpiceJet chairman and managing director Ajay Singh. “As we start inducting the new fuel-efficient B737 MAX and the Bombardier Q400, we will be able to significantly reduce our overall costs even as we aggressively expand our network both in India and overseas.”

Rising jet fuel prices and a depreciating rupee against the dollar have swelled operating costs of airlines as the bulk of payments are dollar-denominated.

The benchmark Brent crude price surged 40.54% in the past 12 months. The rupee weakened 8.21% against the dollar in the same period.