Auditors of SpiceJet Limited, S.R. Batliboi and Associates Llp, have raised doubts about the company’s ability to continue as a going concern as the no-frills airline reported its highest ever quarterly loss during the March quarter primarily due to muted travel demand following the coronavirus outbreak, the grounding of Boeing 737Max fleet, and pricing pressures.
“The company has incurred a net loss during the current and previous year and, its current liabilities exceeded its current assets in the balance sheet, till date. These conditions...indicate the existence of a material uncertainty that may cast significant doubt about the company’s ability to continue as a going concern," said S.R. Batliboi and Associates Llp. The auditors have been raising similar concerns about the airline during the past quarters.
SpiceJet reported its highest ever quarterly loss of ₹807.07 crore in the March quarter, compared to a net profit of ₹56.29 crore in the year-ago period.
Five analysts polled by Bloomberg had estimated a ₹687 crore loss for the airline. SpiceJet’s revenue of ₹3,057.34 crore, however, beat analysts’ expectations. In January-March 2019, it had reported a revenue of ₹2571.83 crore. Total expenses in the March quarter rose 53.6% from the year-ago period to ₹3,864.42 crore.
The airline reported a full-year loss of ₹934.76 crore in 2019-20, compared to a loss of ₹316.08 crore reported in FY19. Revenue, however, rose 42.65% to ₹13,206.42 crore.
The auditors said the company would have reported a wider loss had it not recognized other income and foreign exchange gains. “In our view, there is no virtual certainty to recognize such income and related receivable," the auditor said.
“Had the company not recognized such other income (including its related foreign exchange restatement), the reported loss for the quarter and year ended 31 March 2020 would have been ₹978.31 crore and ₹1,649.30 crore respectively, and accumulated losses as on 31 March 2020 would have been higher by ₹714.53 crore," it said.
SpiceJet said it continues to incur various costs for its grounded Boeing 737Max planes. During the quarter ended 31 March, the company recognized ₹134.5 crore towards aircraft and supplemental lease rentals and other identified expenses, as other income for the reported quarter.
Indian airlines are staring at a revenue loss of ₹1.3 trillion between fiscal 2020 and 2022 because of the covid-19 pandemic, which has severely hit demand, rating agency Crisil said in a report earlier in July.
In a separate development, SpiceJet’s chief financial officer Kiran Koteshwar will step down on 31 August, the airline said.