SpiceJet re-negotiating contracts to bring down costs: Ajay Singh

The airline had posted a net profit of Rs 238.40 crore for the three months ended December 2015

To reduce overall costs, SpiceJet is re-negotiating contracts related to aircraft lease, engineering, maintenance and other areas as some of the pacts are “out of sync” with realities, airline's chief Ajay Singh said. After grappling with turbulent times a year ago, SpiceJet is on the path of turnaround and has remained profitable for four straight quarters.

Satisfied with the progress made by SpiceJet in improving its financial performance, Singh said the focus is now on reducing “big ticket costs”.

“We are working on ways to reduce the cost of (aircraft) leasing, engineering and maintenance, among other areas. In this regard, we are re-negotiating contracts that were entered into the past as some contracts are out of sync with realities,” Singh said in an interview.

Singh, who is the Chairman and Managing Director of SpiceJet, came back at the helm amid concerns in late 2014 over the survival of the airline bogged down by debt woes.

He took over the reins of cash-strapped SpiceJet last year from embattled Maran family.

Besides, Singh said the airline is looking to bring down the cost of ticket sales by way of strengthening its online platform and streamlining the distribution channels.

Registering its highest ever quarterly profit, SpiceJet posted a net profit of Rs 238.40 crore for the three months ended December 2015. In the year-ago period, it had a net loss of Rs 275.03 crore.

While the latest quarterly net profit was mainly driven by lower fuel costs, fall in overall expenses and marginal rise in ancillary revenues also helped its bottom line.

According to Singh, ancillary revenues rose 65-70 per cent in the 2015 December quarter while maintenance and airport costs also declined.

However, he did not provide specific figures.

"We are looking at ways to increase the ancillary revenues," he noted.

In India, ancillary revenues account for about 17 per cent of the total revenues while in European nations, the same is around 20 per cent, he added.

SpiceJet saw its total income from operations climb to Rs 1,459.95 crore in the latest December quarter compared to Rs 1,311.18 crore in the same period a year ago.

The low cost carrier has a fleet of 25 Boeing 737NG, 2 Airbus A320s and 14 Bombardier Q-400s.