Spicejet posts 51% growth in revenue: Neil Mills

Neil Mills, chief executive officer, Spicejet, says that after five consecutive quarters of losses the airline has managed to post a revenue growth of 51% in this quarter. With the week rupee, it is not attractive for the company to engage in hedging.

Below is the edited transcript of his interview to CNBC-TV18. Q: Your airline posted a profit which surprised the street; do you think this is sustainable?
A: We have shown a turnaround after five consecutive quarters of losses. Growth in revenue of 51% is a huge achievement. The whole team has contributed and we are happy with the result. Q: Crude prices are up again. Earlier Brent slipping closer to USD 90 was seen as a significant relief for airline companies. At that point did you manage to hedge some of your cost? Do you see that playing out over the next couple of quarters?
A: In the current environment, where the rupee is relatively week, it is not attractive for us to do hedging. Although international oil prices dropped significantly we never really saw that reflecting in our cost. Q: Both reserve power and load factorshave improved, do you see this improvement to continue? How have load factors panned out in this quarter?
A: We are comfortable with the current load factor. Around 80% mark is more sustainable and comfortable at reasonable revenue which enables us to cover our cost which we were unable to manage in the past. Q: Interest costs have also risen quite substantially. Had that not been the case you would have posted a better profit. Do you see any kind of deleveraging moves in the near-term?
A: No, the cost of Q400 aircrafts that came onto the balance sheets will be shown as interest cost rather than lease cost. So the significant proportion of the increase in lease cost is to do with the aircraft acquisition and not with unproductive debt. So, the interest cost would have just been in a different line item that it wouldn't occur because those Q400s have actually arrived. Q: So net-net at current crude prices and the demand outlook that you are seeing in July could we expect you to post a profit in Q2 as well?
A: The second quarter is and historically has been much weaker. We don't tend to give guidance and it is hard to predict in the current environment.