BackSpiceJet turnaround is still a work in progress: COO
COO Sanjiv Kapoor said in an email interview that SpiceJet is in talks with investors for funding
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New Delhi: Shares of SpiceJet Ltd fell as much as 11.4% on Monday on BSE, closing 9.26% down to ₹ 13.82, on a day the Sensex gained 0.47% to 28,177.88 points. The airline’s chief operating officer (COO) Sanjiv Kapoor said in an email interview that SpiceJet is in talks with investors for funding.
The shares fell after Friday’s results where the airline, now controlled by the Marans of the Sun TV group, reported its fifth straight quarterly loss in the three months ended 30 September. It lost ₹ 310.4 crore in the three months compared with ₹ 559.49 crore in the year-earlier period. The airline’s auditors questioned the airline’s viability in their remarks on BSE. Edited excerpts:
How do you see the fiscal second-quarter numbers?
We are very encouraged by the results. It is not too often you see a 45% reduction in losses, with 12% increase in RASK (revenue per available seat km), 7% decrease in CASK (cost per available seat km), 15% growth in revenues outstripping capacity growth of 7%, and 2% expenses reduction, in a lean quarter anywhere in the world. These are truly encouraging numbers, and these are true operational performance improvements and not the result on non-operating financing activities such as SLBs (sale and leasebacks where airlines see aircraft and then lease them back so as to make their numbers look healthier). And the turnaround is still work in progress; much more upside remains.
You had a September quarter with 82-83% occupancy, but there was a loss of 310 crore. The loss was nearly 20% of the revenue you made. How do you plan to bridge this gap?
This was a 45% improvement over previous year, lots more headroom to both improve revenues and reduce costs once re-capitalized.
Do you expect to get a new investor into the airline soon?
We continue to work on re-capitalization, and when we have something more to say on it, we will.
Can you confirm if you are in talks with Tamil Nadu’s VV Group to invest in SpiceJet?
No, we are not.
Is there a North India-based firm interested in buying a stake in the airline or giving it a big loan?
No comments.
Do you see a delay in the funding harming the airline beyond repair?
No, we don’t.
Isn’t your better performance a result of a stronger rupee, lower fuel prices and a smaller fleet size compared with the same quarter last year?
There was a ₹ 249 crore reduction in losses of which ₹ 26 crore came from fuel and exchange rate together. You think that is more important than the 90% that came from other sources? We had reduced the fleet but, had higher capacity (available seat km) than last year’s Q2. That is a good thing, not bad. That is the right way to do it, work your assets harder.
We believe aircraft lessors such as Babcock and Brown and GECAS (GE Capital Aviation Services) are in talks to take back aircraft and reduce exposure to SpiceJet?
These discussions are privileged between us, and we are on very good terms with these lessors.
The fleet size is already down from 57 to 47 in last few months and some additional Boeing aircraft have gone back this month. Will the fleet be reduced by another 17 Boeing aircraft?
Crazy thought, absolutely not!
We understand that some investors have taken back three more aircraft this week.
We are restructuring our fleet.
The silver lining in the current year is that the rupee is stronger and fuel prices are down, reducing your costs even as your revenues rise.
The rupee is not much better, but fuel prices at current levels will save over ₹ 300 crore per year.
But on the negative side, you will have more competition in the coming months, which will hit profits. How are you gearing to take on the challenge of the new airlines next year, AirAsia India, Tata-SIA’s Vistara and other airline start-ups?
Like how we took them on this year. They did not impact us, our Q2 results show that.
What is the long-term view of the Marans for SpiceJet. Are they open to exiting the airline in full if the offer is good?
No comments.
SpiceJet took the home ministry’s permission to make you a chief executive officer (CEO), but it has been two months since these permissions were granted. Why has the COO not been made a CEO?
I have asked not to be promoted until such time there is a positive quarter.
Will that decision be left to the new investor who takes over possibly?
If that happens before, then perhaps.
There is word that the Narendra Modi government does not want to see another Kingfisher Airlines and is trying to help you out behind the scenes?
No, we have not approached them.
You have not sent a denial to BSE on reports that have appeared that your chief financial officer (CFO) R. Neelakantan has quit?
CFO has not quit, so (there is) nothing to communicate.
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