Lower fuel prices help SpiceJet log Rs26 cr profit in first quarter

Lower fuel prices help SpiceJet log Rs26 cr profit in first quarter
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First Published: Mon, Jul 27 2009. 10 49 PM IST
Updated: Mon, Jul 27 2009. 10 49 PM IST
New Delhi: Discount airliner SpiceJet Ltd, which is backed by billionaire investor Wilbur Ross, on Monday said it has made a profit of Rs26.34 crore for the three months ended 30 June, compared with a loss of Rs129.22 crore in the same period last year, mainly because of lower fuel costs.
It spent Rs182.81 crore in the quarter on aircraft fuel, its biggest expense, or nearly half of Rs310.2 crore a year ago.
“In the current environment, it’s an amazing result,” chief executive Sanjay Aggarwal told Mint.
“It’s a sign that the LCC (low-cost carrier) model has proved itself,” said Kapil Kaul, India chief executive for aviation consultancy firm Centre for Asia Pacific Aviation.
SpiceJet’s revenue for the first quarter rose to Rs634.41 crore from Rs483.40 crore in the year-ago period. SpiceJet, which won a total of $100 million in funding from Ross and Goldman Sachs last year, grew its operations in the fiscal ended 31 March to 19 Boeing aircraft and 125 daily flights from 15 Boeing aircraft and 94 daily flights in the preceding fiscal.
The airline has also formed an ethics committee to bring in greater transparency in its future contracts, said Ajay Singh, a director on the carrier’s board. The decision came after shareholders raised questions in the manner in which the firm was planning to award an aircraft maintenance contract.
Spicejet, which has 12.4% of the air passenger market in June, according to data released by the civil aviation ministry, has been posting losses for the past two years in the June quarter.
Aggarwal, however, said airfare per passenger continued to be under pressure and were lower this quarter compared with a year ago.
Kaul said SpiceJet’s profits may not be sustainable in the ongoing quarter considering the weak demand. “They have a profit this quarter, they will loose in the next quarter and by third quarter, everyone will be an LCC,” Kaul said referring to increased competition from full-service carriers such as Jet Airways (India) Ltd and Kingfisher Airlines Ltd, which have converted almost two-thirds of their flights to low-cost flights.
“With everyone turning LCC, it will surely have an impact on SpiceJet. We will have to see how it goes,” Kaul said.
Last week Jet Airways, India’s largest airline firm by market value, announced a Rs225.31 crore loss for the June quarter, compared with a net profit of Rs143.38 crore a year ago. Kingfisher Airlines is yet to announce its results for the quarter.
SpiceJet’s shares rose 1.33% at the Bombay Stock Exchange to Rs19.05 on Monday. The benchmark Sensex index fell 0.03% to 15,375.04 points.
tarun.s@livemint.com
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First Published: Mon, Jul 27 2009. 10 49 PM IST