SpiceJet’s Dec quarter profit falls 77%
REVENUE GREW 21% TO ₹2,530.83 CRORE IN THE DECEMBER QUARTER, FROM ₹2,096.11 CRORE IN THE YEAR EARLIER.
NEW DELHI : SpiceJet Ltd, India’s second-largest budget airline by market share, swung to an unexpected net profit in the December quarter after two straight quarters of losses.
The earnings, however, marked a sharp decline from the year-ago period as higher expenses outweighed an increase in revenue.
SpiceJet posted a 77% drop in net profit in the three months through December 2018 to ₹55.07 crore, the company said. The airline had a year-ago profit of ₹239.99 crore.
A Bloomberg survey of six analysts expected the carrier to incur a net loss of ₹58.15 crore in the December quarter. Expenses increased 33% from the year earfinancial lier to ₹2,475.76 crore last quarter. It included fuel costs of ₹968.34 crore, a 53% rise from the year earlier. “A strong 8% increase in passenger yields helped partially offset record high cost because of an increase of 34% in crude oil prices and 11% depreciation of the Indian rupee against the USD. The combined effect of these cost escalations was approximately INR (₹)329 crore,” SpiceJet said.
The airline also “reversed some portion of its provisions on its forex obligations taken during the previous quarter for this year,” it said.
Revenue grew 21% to ₹2,530.83 crore in the December quarter, from ₹2,096.11 crore in the year earlier. The figure surpassed the ₹2,478 crore consensus estimate in the Bloomberg survey.
SpiceJet’s results mirror those of India’s largest domestic carrier, IndiGo, which reported a 75% year-on-year drop in net profit in the December quarter to ₹190.88 crore.
Cash-strapped Jet Airways (India) Ltd is scheduled to report its Q3 results on Thursday. IndiGo, SpiceJet, and Jet Airways are the only listed scheduled airlines in India.
SpiceJet said it has added a dozen new planes—nine Boeing 737 Max 8 aircraft and three Bombardier Q400 aircraft—in the December quarter. These expanded its fleet size to 74, including 37 Boeing 737 NG aircraft, ten 737 Max 8, 26 Q400s, and one B737 freighter aircraft.
SpiceJet’s chairman and managing director Ajay Singh attributed the better-than-expected results to revenue growth, tight control on costs, and increase in passenger numbers.
“With a strong improvement in the macro cost environment and the increasing induction of the fuel-efficient Max aircraft, the outlook looks stronger than it has over the past year,” Singh said. SpiceJet, which in January 2017 ordered 205 Boeing planes valued at $22 billion at list price, plans to use a large number of the 737 Max planes to expand its international operations. The single-aisle 737 Max airplanes are not only more fuel-efficient than the Boeing 737 planes but can also fly longer distances and seat more passengers.