Dark clouds lift as SpiceJet posts Rs 102-cr profit on higher fares

Low-cost carrier SpiceJet on Monday reported a net profit of Rs 102 crore for the quarter ended December, against a net loss of Rs 39 crore in the same period last year. Its strong performance was aided by an increase in average fares, besides innovative international forays on less competitive routes and paring of fuel costs as a percentage of revenue.

SpiceJet had posted a net profit of Rs 56 crore in the first quarter of this financial year, but it slipped into the red in the second, with losses of Rs 163 crore.

For the October-December quarter, its revenues stood at Rs 1,603 crore, a rise of 37 per cent over those in the previous quarter. The market responded to the result favourably. The airline’s stock rose five per cent to Rs 46.15 on the BSE on Monday.

Chief Executive Officer Neil Mills said the airline was able to improve its average yields by 29 per cent — from Rs 3,421 per passenger in the corresponding quarter last year to Rs 4,412. This was a key reason for better profitability. What made it more attractive was that it marginally impacted the passenger load factor, which stood at 75 per cent this quarter, against 80 per cent in the year-ago period.

Despite a fare rise effected by the airline this quarter, its overall passenger growth stood at seven per cent, mainly because of global operations (passenger growth of 80 per cent).

Even as the number of domestic passengers it carried declined two per cent, the drop was not as steep as the overall industry’s 12 per cent decline. That could have been mainly because of its strategy to connect the hitherto unconnected smaller towns and cities with the bigger ones.

The airline was also able to reduce its fuel costs as a proportion to total revenue to 45 per cent in the current quarter, from 50 per cent in the comparable quarter last year. Mills said this was because it got cheaper fuel when it flew on international routes.