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SpiceJet logs Rs.102 cr profit in Dec quarter

Airline gains from increased fares despite flying fewer passengers; results disappoint some analysts
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First Published: Mon, Jan 21 2013. 02 07 PM IST
The third quarter of the fiscal is usually the most profitable for domestic airlines. Photo: Ramesh Pathania/Mint
The third quarter of the fiscal is usually the most profitable for domestic airlines. Photo: Ramesh Pathania/Mint
Updated: Mon, Jan 21 2013. 11 48 PM IST
New Delhi: SpiceJet Ltd posted a profit of Rs.102 crore for the peak October-December quarter, compared with a loss of Rs.39 crore a year ago, gaining from increased airfares though it flew fewer passengers.
Revenue rose 37% to Rs.1,603 crore.
The fiscal third quarter is usually the most profitable for domestic airlines and SpiceJet was on average able to raise airfares by nearly 30% year-on-year. Revenue per flight increased 10%.
The results, though, disappointed some analysts.
The Centre for Asia Pacific Aviation, or Capa, had expected a post-tax profit of Rs.135-150 crore, South Asia chief executive Kapil Kaul said, while adding that the results were still favourable given the difficult environment for India’s aviation sector. “Lower estimates are largely because Q3 at industry level has been below expectations, both on yields and PLF (passenger load factor, or flight occupancy),” he said.
Capa in September forecast a December-quarter profit of $25-28 million (or Rs.135-151 crore) for SpiceJet but in January it lowered expectations because of a poor quarter. It did not specify a number.
Brokerage ICICIDirect.com, however, in January had estimated a far lower profit of Rs.20 crore for SpiceJet for the December quarter, Mint reported on 10 January.
SpiceJet said it carried 7% fewer passengers this quarter than a year ago, with occupancy slipping to 75% from 80% earlier, but it was able to charge Rs.4,412 per passenger on average, against Rs.3,421 earlier.
SpiceJet improved its domestic market share in December to 19.20% from 16.80% a year ago.
The increased airfares and market share came as Kingfisher Airlines Ltd has been grounded since 1 October, first over labour trouble stemming from unpaid salaries and, since then, owing to regulatory concerns.
“With better fleet optimization, an altered route mix (thanks to more international flights) and higher yields, fuel cost as a proportion fell to 45% of the total revenue in the current quarter, against 50% in the comparable quarter for the previous year,” SpiceJet said in a note.
“Notwithstanding this improvement, which certainly augurs well for the civil aviation sector, the fact remains that the Indian airline industry continues to bear the brunt of extremely high incidence of taxation. A weighted average tax rate of 24% on ATF (aviation turbine fuel) prices across various stations is among the highest in the world and constitutes the biggest hurdle for domestic carriers in their quest for long-term profitable growth,” the airline said.
Kaul said for SpiceJet a “turnaround in Q400 (aircraft used to run regional operations) operations is critical to deliver sustained profitability. Capa continues to be concerned about the continuing high-cost environment and increasing regulatory risk.”
Most airlines raised airfares during the festival season in October-December, denting travel demand, and 2012 ended with a contraction in the number of travellers for the first time since 2008, amid record high fuel prices and the global financial crisis.
After surging nearly 8% in intra-day trade, SpiceJet ended Monday at Rs.46.15 a share, up 5%. The benchmark Sensex rose 0.31% to end at 20,101.82 points. In terms of volumes, about 14.9 million SpiceJet shares were traded on BSE.
Jet Airways (India) Ltd, which is expected to announce its results shortly, ended at Rs.605.55, up 5.41%, on BSE, while Kingfisher Airlines fell 4.93% to Rs.13.51 a share.
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First Published: Mon, Jan 21 2013. 02 07 PM IST
More Topics: SpiceJet | Q3 | Profit | Budget airline | Neil Mills |