SpiceJet swings into net profit in Q1 at Rs 72 cr

Under the new chairman Ajay Singh, the airline had cut costs and flew more passengers

SpiceJet today posted its second straight quarterly profit at Rs 71.8 crore in the three months ended June, helped by a steep 42 per cent reduction in costs and higher seat occupancy.

The Gurgaon-based airline, which was on the verge of closure late last year, had posted a net loss of Rs 124.1 crore in the 2014 April-June quarter.

The latest quarterly net profit would have been higher but for the wet-lease of aircraft during last three months.

Snapping seven-straight quarters of loss, the budget carrier had returned to the black with a Rs 22.1 crore net profit in the three months ended March, 2015 after original promoter Ajay Singh took control.

However, SpiceJet's sales from operations declined by 34 per cent to Rs 1,106.3 crore in the first quarter of current fiscal. In year-ago period, it stood at Rs 1,691.04 crore.

Profit in the first quarter of current fiscal "was slightly suppressed due its wet-lease operations which are by nature more expensive than conventional leases, and by a weaker rupee relative to previous year", the carrier said.

The wet lease aircraft were taken up to address the short-term capacity shortage arising out of aircraft unavailability, SpiceJet said in a statement.

The two Airbus planes that are now wet-leased, are expected to be replaced by traditional dry-lease aircraft in coming months.

SpiceJet's Chief Financial Officer Kiran Koteshwar emphasised that the carrier is "no longer under financial stress".

The airline also carried more passengers in the latest quarter under review, with the load factor touching almost 90 per cent.

"Costs for the quarter were down 42 per cent relative to same period last year," the statement said.

In line with year-on-year capacity reduction of 33 per cent that was driven by fleet reductions in late 2014, the airline's revenue for the latest June quarter was down 34 per cent compared to the year-ago period.

On a unit basis, revenue per available seat kilometre (RASK) was flat year-on-year, while cost per available seat kilometre (CASK) was down 13 per cent, it added.

"We are working hard to build a world class airline again... This is the second consecutive profitable quarter and I am proud of what we have achieved. But there is still a long way to go," SpiceJet Chairman Ajay Singh said.

With the return of Singh, the airline has been able to able to gain market confidence and "address many of seemingly intractable issues that were holding us back earlier across several dimensions, including very importantly on the costs and funding side", SpiceJet's Chief Operating Officer Sanjiv Kapoor.