Spice Jet loss widens to Rs 321 cr

SpiceJet's net loss widened to Rs 321.5 crore loss in Q4 FY 2014 as against Rs 186 crore loss in the same period last year as it faces impact from high fuel costs, rupee depreciation and slow passenger growth. This was its third successive loss and the airline's has jumped five times to Rs 1,003 crore in FY 2014.

Over the last three months Sun group-owned airline launched series of sales and marketing initiatives including discount offers, made changes to its network and is working on improving its offering. However these initiatives have not resulted in passenger growth. On Saturday the company declared that number of passengers flown in Q4 2014 declined 6% over similar period despite 2% increase in departures and 5% increase in capacity. Directorate General of Civil Aviation data also shows that domestic airlines including SpiceJet were unable to increase the occupancy despite offering discounts. The fourth quarter is seasonally a weak quarter for air travel.

Revenue in the quarter showed 8% growth to Rs 1,589 crore (as against Rs 1,466 crore) and passenger yield improved 17% from Rs 3,739 to Rs 4,735 but this was not sufficient to contain loss. On the expense side fuel, lease rent and airport charges showed increase while maintenance expenses declined.

In its results release SpiceJet said FY 2014 was its most challenging period in India's aviation history. "The sharp depreciation of the Indian Rupee during the quarter ended September 30 2013 was unprecedented. Given the fact that over 75% of any Indian airline's cost is influenced by the US Dollar, the effects of the exchange rates on a broad spectrum of cost heads were crippling.''

The airline however said its year-over-year unit revenue (RASK) rose despite adverse market conditions. Unit revenue (RASK or revenue per available seat kilometer) in the three month ended March 2014 was 5% higher but unit cost (CASK) grew 12% higher than same period last year.

The full year loss announced by SpiceJet was in line with Centre for Asia Pacific Aviation's estimate which too had predicted a Rs 1000 crore loss. Kapil Kaul of CAPA said the airline needs to raise atleast $ 200 million (about Rs 1,200 crore) to stabilise operations. "Recent efforts to improve service delivery will make a decisive impact only when turnaround is fully funded. We see some correction in the airline's pricing strategy especially related to bookings closer to travel date which is a step in right direction and I hope sensible revenue management will continue in future as well,'' he added.