The company under new management's posted stellar quarter aided by low aircraft fuel expense and high load factor.
SpiceJet has posted a net profit of Rs 71.8 crore in April-June quarter from a loss of Rs 124 crore in year-ago period making it the highest-ever Q1 profit. However, the low-budget airline company which was struggling under debt, earned total income of Rs 1106.3 crore in Q1FY16, 34 percent lower from Rs 1678.6 crore in corresponding quarter last fiscal.
The company under new management posted stellar quarter aided by low aircraft fuel expense and high load factor. Collapse in crude price has helped the airline company as there has been a 21 percent fall in US crude prices from about USD 61 a barrel in mid-June. Its aircraft fuel expenses slipped 53.6 percent at Rs 359 crore in Q1 against Rs 773 crore year-on-year. EBITDA, during the quarter, was at Rs 100 crore against loss of Rs 72 crore (Y-o-Y).
“We are working hard to build a world class airline again. These results show that we are on the right path,” said Ajay Singh, Chairman of the company.
SpiceJet feels that numbers will improve as the company is trying to get back to its feet after the recent turbulence.
"The airline’s profit for the quarter was slightly suppressed due to wet-lease operations which are by nature more expensive than conventional leases, and by a weaker rupee relative to previous year. The wet lease aircraft were taken up to address the short-term capacity shortage arising out of aircraft unavailability and the desire to rebuild the network as quickly as possible, and it is expected that these will be replaced by traditional dry-lease aircraft in the coming months," SpiceJet says in a company statement to the exchanges.
The airline recorded a load factor of 89.8 percent for the quarter, an increase of 14.8 percent on annual basis. Costs in Q1 were down 42 percent relative to same period last year.
On a unit basis, revenue per available seat kilometer (RASK) was flat year-on-year, while cost per available seat kilometer (CASK) was down 13 percent.
“We have made significant improvements in our cash flows and liquidity position, and have been discharging our obligations on time. We are emphatically no longer under financial stress. During this quarter, we have re-inducted an aircraft that had previously been returned and are in discussions to re-induct few more, which reflects renewed lessor confidence in SpiceJet”, said Kiran Koteshwar, CFO.
Chairman Ajay Singh said the airline was working on bringing down structural costs.
"We need to bring down all costs, which are not fuel costs so that this profit can be sustainable in the longer run. We need to continue to work on the revenue side in terms of increasing our yields, increasing our loads, increasing our ancillary revenue pieces, so it is a constant effort to ensure that there is a sustainable performance by SpiceJet in the years to come," he told CNBC-TV18.
He commented on reports that SpiceJet was in stake sale talks with foreign carriers and said there was "no hurry" to strike a deal.
"The airline is doing well. We believe that it is currently extremely undervalued so we want to focus on rebuilding this airline and ensuring that it comes up to a level where it can take advantage of the enormous opportunities that the country is going to present," he said.
"The improvement in the numbers is very positive. The return to profitability is sooner than we had expected," Kapil Kaul, CEO - South Asia, CAPA, told CNBC-TV18. "It shows that since the new promoter has taken over, the stability has returned."
Kaul attributed the improvement in SpiceJet's load factors to a reduction in fleet and its "pricing intervention", or flash sales, strategy.
The stock ended at Rs 26.60, up Rs 1.45, or 5.77 percent on the BSE.