SpiceJet gains after Q1 results

SpiceJet rose 3.51% to Rs 12.40 at 9:51 IST on BSE after the company said it achieved an operating profit of Rs 9 crore in Q1 June 2014.

The result was announced after market hours on Thursday, 14 August 2014.

Meanwhile, the BSE Sensex was up 83.17 points, or 0.32%, to 26,186.40.

On BSE, so far 13.24 lakh shares were traded in the counter, compared with an average volume of 55.82 lakh shares in the past one quarter.

The stock hit a high of Rs 12.49 and a low of Rs 11.46 so far during the day. The stock hit a 52-week high of Rs 25.65 on 16 August 2013. The stock hit a 52-week low of Rs 11.10 on 13 August 2014.

The stock had underperformed the market over the past one month till 14 August 2014, falling 31.54% compared with 4.38% rise in the Sensex. The scrip had also underperformed the market in past one quarter, falling 20.13% as against Sensex's 9.61% rise.

The small-cap company has an equity capital of Rs 535.28 crore. Face value per share is Rs 10.

SpiceJet reported net loss of Rs 124.10 crore in Q1 June 2014 as against net profit of Rs 50.56 crore in Q1 June 2013. Net sales declined 0.59% to Rs 1678.59 crore in Q1 June 2014 over Q1 June 2013.

SpiceJet achieved an operating profit of Rs 9 crore in Q1 June 2014 (not considering restructuring and certain one-off costs described below) despite an adverse year-over-year impact on expenses of fuel price and foreign exchange rate of Rs 106 crore.

SpiceJet attributed positive operating performance to the positive impact of SpiceJet's new restructured network and schedule, its investments in brand, marketing, and customer experience, its ongoing cost reduction efforts, and importantly, to its active approach to demand generation via market stimulation through innovative pricing and revenue management.

During the quarter, SpiceJet incurred restructuring and certain one-off costs consisting of Rs 133 crore relating to restructuring of the network and fleet along with capacity rationalization that required early aircraft lease terminations and associated expenses for four aircraft, as well as additional interest and funding costs driven by unprecedented carry-forward losses from the previous fiscal.

The company delivered highest ever RASK (revenue per available seat-kilometre) for the months of May and June, driven by high load, improved yield, and growth in ancillary revenues. The company emerged as the #2 airline in India in terms of domestic passenger share in June despite network rationalization that reduced capacity by 8.4% in the quarter. Across-the-board cost reduction initiatives are well underway, and is the primary focus of the company going forward as the re-structuring continues, the company said.

In July 2014 SpiceJet achieved a load factor of 79.5%, which is by a large margin the highest in its history for the month of July, the company said.

Meanwhile, the auditors of SpiceJet have raised doubts on SpiceJet's claims to be a going concern - a business term used to denote that an organization has the ability to generate resources for operating. The auditor has pointed out that on 30 June 2014, the SpiceJet's total liabilities exceeded its total assets by Rs 1145.57 crore. The red flag for SpiceJet was raised in the audit report along with its Q1 result.

SpiceJet is India's second largest airline by domestic passenger share. The airline operates more than 340 daily flights to 47 destinations, including 40 Indian and 7 international cities. SpiceJet connects its network using next generation fleet of 32 Boeing 737-800 and 6 Boeing 737-900ER aircrafts, along with 15 Bombardier Q-400 aircraft that are focused on Tier II and Tier III cities.

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