Spice­Jet’s Profit Rises 18% in Q1

Air­line says profit mar­gins are at a ‘healthy’ 9%, and rev­enue growth is higher than ca­pac­ity ad­di­tion

The Economic Times - - Companies: Pursuit Of Profit - Our Bureau

New Delhi: In­dia’s air­lines con­tinue to im­prove their fi­nan­cial per­for­mance in the world’s fastest-grow­ing aviation mar­ket.

Spice­Jet re­ported an 18% growth in net profit for the first quar­ter of the cur­rent fi­nan­cial year. This fol­lows ri­val IndiGo’s an­nounce­ment last month of the high­est quar­terly profit by an In­dian air­line.

Profit climbed to ₹ 175.2 crore in the three months ended June from ₹ 149 crore a year ear­lier on the back of im­proved rev­enue in the In­dian mar­ket, Spice­Jet said in a state­ment on Thurs­day. Rev­enue from op­er­a­tions rose 23% to ₹ 1,856.1 crore.

Spice­Jet said its re­sults show that yields dur­ing the first quar­ter are sus­tain­able and this is a good sign for the in­dus­try.

“Our profit mar­gins for the quar­ter are at 9%, which is healthy. Our rev­enue growth of 23% is higher than our ca­pac­ity ad­di­tion of 18% dur­ing the quar­ter un­der re­view. This has been achieved through var­i­ous mea­sures, in­clud­ing cost cuts. Our to­tal cost for the quar­ter rose only by 4% de­spite the fact that fuel cost dur­ing the quar­ter rose by 34%,” Spice­Jet chief fi- nan­cial told ET.

“Spice­Jet con­tin­ues to be well-placed to take fur­ther ad­van­tage of the chang­ing cost and rev­enue dy­nam­ics, sub­ject to strength­en­ing man­age­ment. This is key to de­liv­er­ing sus­tained per­for­mance,” said Kapil Kaul, CEO of CAPA In­dia, a con­sul- of­fi­cer Ki­ran Kotesh­war tancy firm.

Fare lev­els in the mar­ket are sus­tain­able and are help­ing the coun­try’s air­lines to reap ben­e­fits, Kotesh­war said.

IndiGo said on July 31 profit in­creased 37% to ₹ 812 crore in the April-June quar­ter. CAPA said IndiGo’s earn­ings were the high­est quar­terly profit by any air­line in In­dia, beat­ing its es­ti­mate of ₹ 700 crore.

Both air­lines reg­is­tered an im­prove­ment in av­er­age fares dur­ing the quar­ter. IndiGo’s av­er­age fare in­creased 1% to ₹ 4,068, while Spice­Jet’s av­er­age fare rose 9% to ₹ 3,943. Spice­Jet’s profit mar­gin was 9% com­pared with 8% for IndiGo.

The au­di­tors raised con­cerns over Spice­Jet’s abil­ity to con­tinue, fol­low­ing a court or­der ask­ing the car­rier to se­cure ₹ 579 crore, in­clud­ing ₹ 250 crore as a de­posit in con­nec­tion with a share trans­fer dis­pute with the former own­ers of the air­line.

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