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GURUGRAM, August 09, 2019:SpiceJet is off to a great start for the Financial Year 2020 as the airline reported a net profit of INR 261.7 crore and total income of INR 3,145.3 crore for the quarter ending June 2019 as against a loss of INR 38.1 crore and INR 2,253.3 crore for the corresponding quarter last year.
Operating revenues were at INR 3,002.1 crore against INR. 2,220.4 crore for the corresponding quarter last year. On an EBITDA basis, profit is INR 747.5 crore as against INR 100.5 crore for the corresponding quarter last year. Operating expenses were at INR 2,883.6 crore as against INR 2,227.9 crore for the corresponding period last year. Effective April 1, 2019, the airline adopted the new accounting standard IND AS 116 which effectively capitalises operating leases, and 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 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. The airline, however, spectacularly moved in to salvage this unprecedented situation with 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, at a phenomenal pace between April 01, 2019 and June 15, 2019.
On the grounded 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.
Ajay Singh, Chairman and Managing Director, SpiceJet said, “SpiceJet has been on a spectacular growth journey and this quarter, in particular, has been very special for us. 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.”
Key business updates
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 during the quarter 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. Besides, SpiceJet 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 is the largest regional player in the country with 51 daily UDAN flights and operates to 12 destinations under the regional connectivity scheme providing air connectivity to the remotest corners of the country. Earmarking another important milestone, the airline, also launched its Guwahati-Dhaka flight under the International Air Connectivity Scheme (IACS) which makes it the country’s first IACS flight.
In terms of operational parameters, SpiceJet had the best passenger load factor amongst all airlines in the country during the quarter. The average domestic load factor for the quarter was 93.8%. For 50 months in a row, SpiceJet has flown the highest load factors in the Indian aviation market, a feat unparalleled globally.
SpiceXpress, the dedicated air cargo arm of SpiceJet, has been on a growth trajectory with one more freighter being added to its fleet in the quarter. 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. SpiceXpress has 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.
Fleet expansion outlook
The company had estimated that the grounded Boeing 737 MAX aircraft to resume normal operations by July/August 2019 as per the understanding with the aircraft manufacturer. With the current developments and uncertainty around the exact month of resumption, the company plans to cater to the winter season by inducting 5-10 Boeing 737 NG aircraft and 3 Q400 aircraft during October 2019.
Disclaimer:
Certain statements in this release concerning our future growth prospects are forward-looking statements, which involve a number of risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding fluctuations in earnings, fluctuations in foreign exchange rates, our ability to manage growth, intense competition in aviation sector including those factors which may affect our cost advantage, wage fluctuations, our ability to attract and retain highly skilled professionals, time and cost overruns on various parameters, our ability to manage international operations, reduced demand for air travel, liability for damages, withdrawal or expiration of governmental fiscal incentives, political instability, legal restrictions on raising capital or general economic conditions affecting our industry.
The words “anticipate”, “believe”, “estimate”, “expect”, “intend” and similar expressions, as they relate to us, are intended to identify certain of such forward looking statements. The Company may, from time to time, make additional written and oral forward-looking statements, including statements contained in our reports to shareholders. The Company does not undertake to update any forward-looking statements that may be made from time to time by or on behalf of the Company unless it is required by law.
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