SpiceJet faces turbulence as Q2 net loss widens

The low-cost air carrier announced its Q2 2019 earnings after market hours yesterday, 13 November 2019.

SpiceJet reported a consolidated net loss of Rs 461.21 crore in Q2 September 2019, higher than net loss of Rs 382.71 crore in Q2 September 2018.

Revenue from operations for quarter ended September 2019 jumped 51% to Rs 2848 crore on YoY basis.

The company reasoned dismal Q2 results on the back of inflated costs with respect to grounding of Boeing 737 MAX and a seasonally weak quarter. This includes a loss of Rs 180.3 crore on account of accounting standard IND-AS116; without which the loss is Rs 282.3 crore.

With the grounding of Boeing 737 MAX, the company continues to incur various costs and losseswith respect to these aircraft. The company is in the process of determining the costs and losses (including opportunity losses) incurred by it and has initiated the process of seeking reimbursements and claims from the Aircraft manufacturer.

SpiceJet yet again excelled on operational parameters to report the highest passenger load factor amongst all airlines in the country all through the quarter. The average domestic load factor for the quarter was 92.6%. SpiceJet has recorded over 90% load factor for 53 successive months.

Commenting on company's Q2 performance, Ajay Singh, chairman and managing director, SpiceJet said, "With the industry's growth rate slowing down in the past few months the impact is evident on the bottom line. The continued grounding of the 737MAX has hit our growth plans adversely and resulted in inefficient operations and as a result, increase in costs. Nevertheless, we have added 37 planes to our fleet in the past six months to ensure smooth operations and continued growth. The likely return to service of the 737 MAX early next year, and as indicated by Boeing recently, would mean that SpiceJet has at its disposal more than 25 brand new planes and we look forward to it. The return of the 737 MAX will provide a huge boost to our operations and we are confident that with the rigorous scrutiny, the MAX will be one of the safest airplanes ever to fly."

The company has inducted three Boeing 737 NG aircraft, one Q400 and two Freighters during the quarter ended 30 September 2019 and plans to enhance passenger capacity by inducting aircraft on short term leases in the ongoing winter schedule.

Shares of SpiceJet were down 5.15% at Rs 107.85. Meanwhile, the S&P BSE Sensex was trading 0.18% lower at 40,044.59.

SpiceJet is a low-cost air carrier. SpiceJet operates 516 average daily flights to 60 destinations, including 51 domestic and 9 international ones.

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