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SpiceJet reports second quarter of profit

spicejetSpiceJet today reported a net profit of Rs 71.8 cr for Q1FY16, an improvement of Rs 195.9 cr relative to the net loss of Rs 124.1 cr for the same quarter last year.

On a revenue base of Rs 1,106.3 cr for the quarter, this translates to a net margin of 6.5%.

The company is in the midst of a turnaround under a new promoter after Kalanidhi Maran, the former promoter, gave up control following mounting losses.

“This is the second consecutive profitable quarter for SpiceJet, on the heels of a profitable Q4FY15. The airline’s profit for the quarter was slightly suppressed due its wet-lease operations which are by nature more expensive than conventional leases, and by a weaker rupee relative to previous year,” the company said.

On an EBITDA basis, SpiceJet reported positive Rs 126.7cr at 11.5% EBIDTA margin, against negative Rs 43.1 cr the previous year.

On an EBITDAR basis, SpiceJet reported positive Rs 287.5cr at 26.0% EBITDAR margin, against positive Rs 231.2cr at 13.8% EBITDAR margin last year.

The wet lease aircraft were taken up to address the short-term capacity shortage arising out of aircraft unavailability and the desire to rebuild the network as quickly as possible, and it is expected that these will be replaced by traditional dry-lease aircraft in the coming months, the company said.

The decent performance is likely to be an eye-opener for many industry-watchers, who felt that the company’s hyper-aggressive ‘sales’ would dent margins and bleed it even more. SpiceJet has been at the forefront of a fare ware in recent months.

As a result, the airline recorded a load factor of 89.8% for the quarter, the highest in the industry. This load factor reflects an increase of 14.8% over the same period last year.

In line with year-on-year capacity reduction of 33% that was driven by fleet reductions in late 2014, the airline’s revenue for the quarter was down 34% relative to same period last year.

Costs for the quarter were down 42% relative to same period last year. On a unit basis, revenue per available seat kilometer (RASK) was flat year-on-year, while cost per available seat kilometer (CASK) was down 13%.

“We are working hard to build a world class airline again. These results show that we are on the right path,” said Ajay Singh, Chairman, SpiceJet Ltd.

“This is the second consecutive profitable quarter and I am proud of what we have achieved. But there is still a long way to go. I am confident that the best is still ahead of us. We will continue to focus on growth and on getting operational reliability and on-time performance back to world class standards. We need to strengthen SpiceJet so that it is able to take advantage of the enormous opportunities that will come its way in the coming years,” he added.

“The return to profitability in Q4FY15, and the achievement of the best ever Q1 results in our history in Q1FY16, are achievements that even our most hardened naysayers will acknowledge as remarkable”, said Sanjiv Kapoor, Chief Operating Officer, SpiceJet Ltd.

“With the return of SpiceJet’s co-founder Ajay Singh as our Chairman and Managing Director, we have been able to gain market confidence and address many of the seemingly intractable issues that were holding us back earlier across several dimensions, including very importantly on the costs and funding side. I am proud and gratified to have been part of what will be looked upon as a historical turnaround in Indian aviation”, he added.

“We have made significant improvements in our cash flows and liquidity position, and have been discharging our obligations on time. We are emphatically no longer under financial stress. During this quarter, we have re-inducted an aircraft that had previously been returned and are in discussions to re-induct few more, which reflects renewed lessor confidence in SpiceJet”, said Kiran Koteshwar, Chief Financial Officer, SpiceJet Ltd.

“As our performance continues to improve, we will be in a position to gradually pay off historical liabilities as well on terms agreed to with various suppliers, while investing in all of the areas required to secure our future and regain our earlier position in the market”, he added.

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