SpiceJet had the third- largest market share in the quarter. Photo: Mint
SpiceJet had the third- largest market share in the quarter. Photo: Mint

Q3 results: SpiceJet reports surprise profit after two quarters of losses

  • SpiceJet's Q3 profit fell 77% to 55.07 crore from 239.99 crore a year ago on revenue of 2,530.83 crore
  • A strong 8% increase in passenger yields helped partially offset the adverse impact of oil prices and rupee depreciation

Mumbai: SpiceJet Ltd, India’s second-largest budget airline by market share, swung to an unexpected net profit in the December quarter (Q3) after two straight quarters of losses. The earnings, however, marked a sharp decline from the year-ago period as higher expenses outweighed an increase in revenue.

SpiceJet posted a 77% drop in net profit in the three months through December 2018 to 55.07 crore, the company said. The airline had a year-ago profit of 239.99 crore. A Bloomberg survey of six analysts expected the carrier to incur a net loss of 58.15 crore in Q3. Expenses increased 33% from the year earlier to 2,475.76 crore last quarter. It included fuel costs of 968.34 crore, a 53% rise from the year earlier.

“A strong 8% increase in passenger yields helped partially offset record high cost because of an increase of 34% in crude oil prices and 11% depreciation of the Indian rupee against the USD. The combined effect of these cost escalations was approximately 329 crore," SpiceJet said.

The airline also “reversed some portion of its provisions on its forex obligations taken during the previous quarter for this financial year," it said.

Revenue grew 21% to 2,530.83 crore in Q3, from 2,096.11 crore in the year earlier. The figure surpassed the 2,478 crore consensus estimate in the Bloomberg survey.

SpiceJet’s results mirror those of India’s largest domestic carrier, IndiGo (InterGlobe Aviation Ltd), which reported a 75% year-on-year drop in net profit in Q3 to 190.88 crore.

Cash-strapped Jet Airways (India) Ltd is scheduled to report its Q3 results on Thursday. IndiGo, SpiceJet, and Jet Airways are the only listed scheduled airlines in India.

SpiceJet said it has added a dozen new planes—nine Boeing 737 Max 8 aircraft and three Bombardier Q400 aircraft—in the December quarter. These expanded its fleet size to 74, including 37 Boeing 737 NG aircraft, 10 737 Max 8, 26 Q400s, and one B737 freighter aircraft.

SpiceJet’s chairman and managing director, Ajay Singh, attributed the better-than-expected results to revenue growth, tight control on costs, and increase in passenger numbers.

“With a strong improvement in the macro cost environment and the increasing induction of the fuel-efficient Max aircraft, the outlook looks stronger than it has over the past year," Singh said.

SpiceJet, which had in January 2017 ordered 205 Boeing planes valued at $22 billion at list price, plans to use a large number of the 737 Max planes to expand its international operations.

The single-aisle 737 Max airplanes are not only more fuel-efficient than the Boeing 737 planes but can also fly longer distances and seat more passengers.

SpiceJet plans to start flights to new destinations, including under the government’s regional connectivity scheme, and add new aircraft.

“With sector headwinds having subsided, we are bullish on our future prospects and will continue to invest aggressively in creating capacity in line with our forecasts," Singh said. The fuel-efficient Boeing 737 Max planes will help to improve margins, he added.

SpiceJet currently flies to 51 domestic and eight international destinations. Its cargo arm, SpiceXpress, began services from Guwahati to Hong Kong and Dubai in the December quarter and plans to add up to five more freighter aircraft in this calendar year.

On Monday, SpiceJet shares rose 2.4% to 80.30 on the BSE, outperforming the benchmark Sensex that fell 0.41% to 36,395.03 points.

This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.