SpiceJet Q2 loss deepens as forex, grounded fleet weigh on earnings

New Delhi: Low-cost carrier SpiceJet Ltd’s loss increased about 36% year-on-year to ₹621 crore in the July-September quarter, hurt by foreign exchange losses and as many of its planes remained grounded for maintenance.

Loss in the previous quarter was ₹234 crore and ₹458 crore in the year-ago-period. Revenues declined both sequentially and year-on-year by 30% and 15%, respectively, to ₹730 crore.

The Ajay Singh-promoted airline suffered a ₹190-crore forex loss, compared with a ₹5 crore gain a year earlier, underscoring continued pressure from dollar-denominated lease payments, it said in an exchange filing on Wednesday.

SpiceJet said that non-operation of “the certain part of its fleet for awaited maintenance” coupled with airspace restrictions in place and weaker rupee against the dollar affected the results for the September quarter. In a fleet of 56 aircraft, 35 were grounded in the June quarter. The airline did not share its operational fleet size for the September quarter.

According to Gagan Dixit, analyst at Elara Capital, SpiceJet will need to take its fleet size to 50 and above for it to turn profitable. “December quarter is expected to be a seasonally better quarter and numbers could see some improvement. But for the numbers to sustain, the airline would need to have its fleet up to 50 ideally and ensure ungrounding of aircraft or ensure supplies,” he said.

Aviation turbine fuel costs for the country’s fourth-largest airline, with a 2% market share, declined 19% sequentially to ₹312 crore, while lease rentals saw a 80% drop to ₹20 crore. Maintenance costs remained flattish sequentially at ₹165 crore.

Market leader InterGlobe Aviation, which runs IndiGo, reported a net loss of ₹2,582 crore in the July-September period, because of higher foreign exchange costs, even as revenue from operations rose 9.3% year-on-year to ₹18,555 crore, driven by strong operational execution and optimized capacity deployment.

Air India (including Air India Express) and Akasa Air, are privately-held and report results annually to the Ministry of Corporate Affairs.

SpiceJet said it has raised ₹4,172 crore through preferential allotment of equity warrants and shares to non-promoter investors, and using the funds to revive grounded aircraft, rationalise its fleet, and expand into new sectors.

“The company also continues to implement cost-control initiatives with the objective of achieving profitability and sustainable cash flows in the future. It has settled part dues with certain vendors and lessors; and is actively engaged in discussions with other vendors to obtain relief in the settlement of outstanding obligations,” it further said.

“…the management is confident that the company will be able to settle its liabilities with vendors / lessors as they fall due,” it said.

The July-September period is seen as a seasonal weak quarter for the airline industry. All the three months reported a decline in passenger numbers, as per the country’s aviation regulator, Directorate General of Civil Aviation (DGCA).

Earlier in November, SpiceJet said it was boosting the winter schedule (26 October to 28 March) operations, where weekly domestic departures are up over 20%. To cater to existing demand, the airline inducted five additional aircraft on damp lease (where it gets the aircraft and pilot, but cabin crew are its own). This made the total number of new fleet additions to 10, and has 30 aircraft in operation as on 12 November. The airline had previously said it aims to more than double its operational fleet.