SpiceJet net dips 10% on higher costs

Income from operations increased 19.6% to Rs 1,688 cr, aided by growth in passenger traffic and improved yields

India’s second largest budget air carrier, SpiceJet, on Monday reported a 10 per cent decline in net profit at Rs 50.6 crore for the first quarter ended June. The airline had a net profit of Rs 56.2 crore during the corresponding period last year.

While income from operations increased 19.6 per cent to Rs 1,688 crore, aided by growth in passenger traffic and improved yields, the company found it challenging to absorb the increase in costs of operations.

In the period under review, while total income of the airline increased 16 per cent to Rs 1,704 crore as compared to Rs 1,467 crore recorded in the year-ago period, total expenses went up 16.9 per cent to Rs 1,642 crore.

“The overall performance should be considered satisfactory and has to be viewed in the context of several adverse circumstances that continue to make the business environment for the airline industry extremely challenging,” SpiceJet said.

Fuel expenses for the airline, in fact, increased by 10.5 per cent to Rs 740 crore during the quarter. Fuel cost as a proportion, however, fell to 43 per cent of the revenue in the quarter against 46 per cent in the comparable quarter for the previous year, mainly due to better realisation from foreign routes that now make up almost 11 per cent of revenue.

The airline added in its statement, “Notwithstanding the several headwinds in the form of weak rupee and high cost of fuel, the management has executed with an emphasis on efficiency, elimination of waste and profitability. However, currency depreciation and higher crude prices continue to exert pressure on margins.”

Passenger traffic for the airline grew by 13% in the April-June period. Though average yield per passenger improved by five% to Rs 4278 during the quarter, passenger load factor dropped to 77% as compared to 80% registered in the corresponding period last fiscal.

The airline’s market share in June went up to 19.50% as against 18.60% reported in the same month last year.

Shares of SpiceJet were trading at Rs 25.75 a piece on the Bombay Stock Exchange.