SpiceJet sees Q2 loss, better times ahead

SpiceJet sees Q2 loss, better times ahead

New Delhi: Low-cost carrier SpiceJet sees a loss in the September quarter, on sharply lower average ticket-prices and with one in every four seats on flights during the period staying unsold, its chief executive said on Thursday.

But improving conditions beginning in the first few weeks of the festival season would likely yield a profit in the December quarter and in the year to March, Sanjay Aggarwal told Reuters in an interview.

SpiceJet swung into a profit in the June quarter, helped by cost cuts amidst easing jet fuel prices and improving air traffic. In comparison, peers Jet Airways and Kingfisher Airlines had posted losses.

Intensifying competition had seen yields, or the average revenue from customers, plunge for SpiceJet to Rs2,600-Rs2,700 during the July-September quarter from 4,000 rupees seen in the prior year period, Aggarwal said.

“This quarter got killed," Aggarwal said. “It was all driven by lower yields and markets ... You look at the 35% drop in yields. All that means is airlines have created less revenue. The money is not coming."

With the peak season for air travel coming in, fares had started creeping up, and Aggarwal expected the carrier’s yields to improve to the “low 3,000’s," with load factors in the “low to mid 70s."

“In the last four weeks, yields have moved up. Demand is still kind of holding up at levels we saw last month," he said. “If everything remains as it is today and we were to forecast the quarter, I think, yes, it’ll be a profitable quarter."

International Routes

Aggarwal said the firm had signed up to buy nine Boeing planes by January 2012. SpiceJet will be eligible to fly international routes by June 2010, and it is considering whether to exercise that option.

“Europe and US are not on our radar," he said. While a final decision had not been taken, the destinations would likely be the west Asia and south-east Asia, Aggarwal said.

Aggrawal said the firm was open to acquiring other airlines, but would do so only if it added to the firm’s earnings. He declined to say if they were in talks with anybody.

Shares in Spicejet closed 1.7% down at Rs37.30 in a Mumbai market that was down 0.21%. The stock had climbed 85% in the September quarter, outpacing the broader market’s 18% rise.