SpiceJet reports losses of ₹593 crore despite record growth in cargo operations
- SpiceJet reported a net loss of ₹593.4 crore for the first quarter ended June 30.
- Revenue from cargo increased by 144% during the quarter under review.
- According to the Directorate General of Civil Aviation (DGCA), India’s domestic air passenger traffic crashed over 43% in May on a year-on-year basis. It continued with a 50% dip in June even after the government eased restrictions on domestic travel.
- SpiceJet shares closed a percent lower ahead of the earnings today.
The chairman blamed the “worst‐ever crisis ” for its losses. Although the total expenses, including fuel and airport charges, declined significantly, along with that, the revenue took a massive hit too. The company’s total revenue during the lockdown quarter declined 83% YoY to ₹4,83.24 crore compared to the same period last year.
With the suspension of air travel for almost two months in the last quarter, SpiceJet experienced a total washout quarter. Apart from the lockdown, the additional cost of operating in the times of coronavirus and the burden of aircraft rentals was piling up. The ticket pricing norms by the government were another hurdle for the airline.
“Flight operations were suspended for most part of the quarter, and the partial resumption of flights initially and the weak demand thereafter was a reminder of the significant problems that this pandemic has resulted in,” said Ajay Singh, Chairman and Managing Director, SpiceJet.
Cargo cash cushioned the overall revenue
Its revenue from cargo increased by 144% during the quarter under review. The company earned total revenues of ₹2,36.39 crore from cargo operations during the current quarter, compared to ₹96.85 crore in the same quarter last year. But this was not enough for the airline to ride out of the pandemic without reporting losses.
The Directorate General of Civil Aviation (DGCA) data showed that India’s domestic air passenger traffic crashed over 43% in May on a year-on-year basis. It continued with a 50% dip in June even after the government eased restrictions on domestic travel. And, in that SpiceJet carried a small number of passengers.
|Passengers carried by SpiceJet||April to June 2020||April to June 2019||% change|
SpiceJet shares closed a percent lower ahead of the earnings today.
Despite the two consecutive weak quarters, SpiceJet investors are hopeful of the company’s long term prospects, and that is the reason the share price has also rallied nearly 4% since March 31.
SpiceJet chairman said, “I am confident that as more and more states ease travel restrictions and business activity gets back to normal, there will be a significant improvement in the operating environment for airlines, and we are witnessing some early encouraging signs towards recovery.”
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