When Jet Airways (India) Ltd announced its September quarter results some time back, this column said that its performance was unusual as it did better than in the June quarter, which is typically stronger. The September quarter is traditionally a slow quarter for aviation companies. SpiceJet Ltd’s results, however, do not follow the same trend. While the airline company did well in the September quarter, SpiceJet’s performance does not stand out as much as Jet Airways’ did.

Sure, all aviation companies gain from softer crude oil prices and SpcieJet is no exception. Even though its aviation fuel expenses as a percentage of revenue have dropped compared with earlier quarters (in line with crude oil prices), the measure increased marginally to 32.4% quarter-on-quarter (q-o-q). On the other hand, Jet Airways had seen some decline in the measure sequentially, helping it perform better q-o-q.

Nevertheless, it’s worth noting that SpiceJet managed to eke out an operating profit of 2.5 crore against a massive operating loss of 267 crore in the same period last year. That translates into a very small operating profit margin of 0.24%. In comparison, Jet Airways’ stand-alone operating margin was 6.75%. On earnings before interest, taxes, depreciation, amortization and aircraft and engines lease rentals, popularly known as Ebitdar, performance of both companies was similar, with an Ebitdar margin of about 17%. Note that market leader InterGlobe Aviation Ltd, which is yet to announce its September quarter numbers, had earned an Ebitdar margin of 37.4% in the June quarter.

SpiceJet’s Ebitdar (excluding other income), a better profitability measure to evaluate aviation companies, came in at 172 crore compared with a loss of about 8 crore in the September quarter last year. According to SpiceJet, the airline recorded a load factor of 92.8% for the quarter, the highest in the industry. While that augurs well, SpiceJet’s last quarter net profit of 23.77 crore did get a boost from a big jump in other income.

Aviation stocks have done well on the bourses helped by lower crude oil prices, the draft aviation policy announcement and a re-rating that happened in the sector, as market leader InterGlobe Aviation, which runs IndiGo, decided to list itself. Sure, it helps that the outlook on crude oil is soft and that should continue to keep these stocks in favour. What’s more, the fact that 20% more passengers were carried by domestic airlines during January-September period than last year is encouraging. However, investors must also keep in mind the balance sheet position—SpiceJet had a negative networth of 1,118 crore as of 30 September while borrowings (long-term plus short-term) stood at 1,335 crore.

The writer does not own shares in the above-mentioned companies.