Spicejet clocks loss for 4th qtr in a row
NEW DELHI: No-frills carrier Spicejet Ltd on Wednesday reported a consolidated loss of ₹66.78 crore for the December quarter, its fourth consecutive quarterly loss, primarily due to low travel demand following the coronavirus outbreak.
Spicejet had reported profit of ₹77.97 crore in the same period of the previous year.
The airline’s auditors Walker Chandiok and Co. Llp said the December quarter loss would have been higher but for other income and foreign exchange gains on account of compensation expected from Boeing Co. for the grounding of 737Max aircraft.
Spicejet is currently the only Indian operator of Boeing 737Max planes, which were grounded after two fatal crashes in 2018 and 2019. The Indian aviation regulator is yet to allow the aircraft to resume operations on Indian skies.
The aircraft was in the past few months allowed to fly by US and European regulators. To be sure, most airlines globally don’t assume compensation as revenue directly and book the amount only after it is agreed, finalized and paid, said a senior official, requesting anonymity.
“Auditors have been noting their discomfort with these assumptions each quarter,” the official added. The auditors have also raised doubts about the company’s ability to continue as a going concern after Q3 results as accumulated losses amounted to ₹3,960.26 crore (at the end of 31 December 2020), resulting in a complete erosion of its net worth, with current liabilities exceeding current assets by ₹4,778.36 crore. At the end of 31 December 2020, Spicejet’s negative net worth stood at ₹2,343 crore.
Five analysts polled by Bloomberg had estimated Spicejet’s Q3 standalone loss at ₹34.76 crore on a revenue of ₹1,783.90 crore. Its consolidated revenue dropped to ₹1,901.62 crore, down 51.57% on an annual basis.
The company’s total expenses also dropped by 48.85%% to ₹1,968.40 crore. However, expenses continue to exceed revenue.
“The pandemic has, undoubtedly, been the biggest crisis to hit the aviation industry and we are confident that things will only get better for us from now on,” Spicejet chairman and managing director Ajay Singh said.