SpiceJet’s Profit Rises 18% in Q1
Airline says profit margins are at a ‘healthy’ 9%, and revenue growth is higher than capacity addition
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.