SpiceJet swings to Q1 profit on reimbursement income, higher revenue

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Despite the strain faced by the aviation sector in India, low-cost carrier SpiceJet reported net profit of Rs 261.7 crore and total income of Rs 3,145.3 crore for the quarter ending June 2019. Last year, it had a loss of  Rs 38.1 crore on revenue of Rs 2,253.3 crore for the corresponding quarter last year.

Operating expenses were higher this year at Rs 2,883.6 crore as against INR 2,227.9 crore for the corresponding period last year.

Operating revenues were at Rs 3,002.1 crore against Rs 2,220.4 crore for the corresponding quarter last year, indicating that non-operating revenue increased to Rs 143 cr from Rs 33 cr last year.

This contributed to the profit jump.

Much of the other income was related to reimbursements from Boeing for expenses related to the grounding of Boeing 737 Max aircraft.

“..the company continues to incur various costs with respect to these aircraft and during this quarter ended June 30, 2019 on account of its inability to undertake revenue operations, the company has recognized INR 114.1 crore towards aircraft and supplemental lease rentals as other income. This is a part recognition of the total reimbursements, on which the company is working with the aircraft manufacturer, towards various ascertained costs and losses incurred by the company on this aircraft,” it said.

EBITDA, or operating profit, is Rs 747.5 crore as against INR 100.5 crore for the corresponding quarter last year. However, the definition of EBITDA has changed this year due to changes in accounting methodologies.

Effective April 1, 2019, the airline adopted the new accounting standard IND AS 116 which effectively capitalises operating leases. “As result of this the lease rentals are now reflected as interest and depreciation for the quarter ending June 2019. Additionally, owing to the retrospective treatment of this standard there is a reduction of INR 302.2 crore from retained earnings status as at April 1, 2019,” the company said.

“Airline operations remained stressed for a large portion of this quarter due to the continued grounding of its superior B737 MAX aircraft, which limited its ability to take its yields up owing to passenger disruptions and re-accommodation; while simultaneously increasing its fixed costs on this category of aircraft,” SpiceJet said.

The airline, however, introduced additional flights on its existing B737 NG & Q400 fleet by increasing their daily utilisation to 15-16 hours per day and 13-14 hours per day respectively, and then inducting 27 Boeing 737 NGs between April 01, 2019 and June 15, 2019.

Ajay Singh, Chairman and Managing Director, SpiceJet called it a special quarter. “We added 32 aircraft to our fleet expanding at a pace unprecedented for a sector plagued by crisis showcasing our robust business model and proven operational capabilities.”

“We are happy that we were able to minimise passenger inconvenience by quickly filling the capacity gap created in India’s aviation sector. The results would have been vastly better but for the painful grounding of the MAX aircraft. We look forward to their swift return to service in the near future that will help SpiceJet increase its margins and provide a superior level of service,” he added.

FAST EXPANSION

Between April and June 2019, SpiceJet added 32 aircraft – 27 Boeing 737 NG aircraft, four Bombardier Q400s and one B737 freighter.

At the end of the reported quarter, SpiceJet’s fleet size stood at 107 which included 73 Boeing 737 NG aircraft, 31 Q400s and three B737 freighters.

The airline has been allotted an additional 48 domestic and international departure slots in Mumbai; and 15 domestic and international departure slots in Delhi. Starting April 1, 2019 the airline has announced 130 additional flights that includes 78 flights connecting Mumbai, 20 flights connecting Delhi and 12 flights connecting Mumbai and Delhi.

The airline launched a number of new flights and enhanced frequencies on its international network from the key metros of Mumbai, Delhi and Hyderabad to global hotspots such as Jeddah, Bangkok, Colombo, Hong Kong, Dubai and Dhaka during the quarter. It also announced the launch of flight services from Mumbai to the Saudi capital city of Riyadh which earmarks the airline’s 10th international destination.

Currently, SpiceJet operates to 52 domestic and nine international destinations.

It has 51 daily UDAN flights and operates to 12 destinations under the regional connectivity scheme. The airline also launched its Guwahati-Dhaka flight under the International Air Connectivity Scheme (IACS) which makes it the country’s first IACS flight.

The company continued to dominate the load charts, with an average domestic load factor for the quarter of 93.8%. For 50 months in a row, SpiceJet has flown the highest load factors in the Indian aviation market, it pointed out.

It also added one freighter to SpiceXpress, the dedicated air cargo arm of SpiceJet.

SpiceXpress now has nine scheduled departures six days a week to Hong Kong from Delhi, Kolkata and Guwahati and one domestic rotation connecting Hyderabad, Delhi, Mumbai, Bengaluru and Chennai. It also operated numerous charter services to international destinations such as Sharjah, Ras Al Khaimah, Teheran, Sulaimaniyah (Iraq), Bosaso (Somalia) & Hargeisa (Somali Land) besides helping transport relief material to Bhubaneshwar during Cyclone Fani.

“SpiceXpress will soon start operating scheduled services on the Delhi-Kabul-Delhi route from later this month. SpiceXpress will also be adding two more freighters this month and will adding services on the Mumbai-Sharjah-Mumbai, Delhi-Mumbai-Delhi and Bangalore-Singapore-Bangalore routes in the coming weeks,” the company said.

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