New Delhi: Budget airline SpiceJet Ltd announced net losses of Rs133.50 crore in the year to March, around 85% more than the Rs72.1 crore it lost the previous year, in the wake of steeply rising aviation fuel prices and slowing growth in passenger traffic.
SpiceJet’s losses follow similar financial results at almost all airlines in India. Jet Airways (India) Ltd, which runs an eponymous airline and JetLite Ltd, reported losses of over Rs253 crore in fiscal 2008. Simplifly Deccan that is operated by Deccan Aviation Ltd, now controlled by the UB Group which also owns Kingfisher Airlines Ltd made losses of some Rs643.64 crore in the nine months to March (the company’s financial year ends in June).
Gurgaon-based SpiceJet did not reveal the latest quarter’s financial numbers.
Siddhanta Sharma, executive chairman of SpiceJet, said the results were in the line of expectations. Sharma had predicted that the loss for the year would be around Rs100 crore and said that the current deviation is primarily due to accounting provisions made. Details of the provisions were not immediately available.
“The increase in aviation turbine fuel prices in November and December have taken a toll on the profits. Apart from this, there was a lean season from July to September that also contributed to loss,” Sharma said on phone. In terms of number of passengers flown, SpiceJet ranks third behind Simplifly Deccan and InterGlobe Aviation Pvt. Ltd-run Indigo among low cost carriers.
SpiceJet has been under pressure to rationalize routes and costs as aviation fuel prices climbed drastically. Prices of the fuel have risen from Rs47,444.14 per kl in January 2008 to Rs66,226.66 in June. Even as airlines have passed on the rise in jet fuel prices through what in the industry is called fuel surcharges levied on air tickets, load factors or the average number of people carried per plane has fallen accompanied by a decelerating growth compared with the past few years.
SpiceJet’s load factors for May were 72% down from 77.3% in the same month last year. It increased its market share, partly by increasing its fleet size, in the same period from 8.2% in May 2007 to 10.8% in May this year.
But now, instead of continuing to expand the number of planes in its fleet, the airline has leased one of its 18 Boeing Co.-made aircraft to an European carrier for the next few months. Further, from 1 July, the airline intends to use just 15 aircraft on domestic routes, sending the other two for maintenance checks. Depending on the market circumstances few months down the line, the carrier may choose to ply those aircraft on domestic routes, lease them out or keep them grounded.
Given its cash-strapped conditions, the airline has decided for the first time, to seek a credit insurance of $10 million from Tata AIG. “We will be using it towards our working capital,” the airline’s chief financial officer Parthasarthi Basu said last week, adding the facility will help the airline raise money from banks to that extent. Basu said the $10 million (Rs43 crore) would be in addition to the nearly $100 million the airline plans to raise this year.
Shares of SpiceJet in intra-day trades touched a 52-week low of Rs24.75 each on the Bombay Stock Exchange before closing at Rs24.90, down 4.05%. The bourse’s benchmark index lost 2.47%.