Low-cost airline SpiceJet's third-quarter performance had some cheer mixed with a bit of gloom.
The airline posted a standalone loss of Rs 56.95 crore for the quarter ended December 2020 amid limited operations and muted demand. The profit in the corresponding period was at Rs 73.2 crore.
What were the hits?
Despite the losses, it matters that the airline headed by Ajay Singh managed to halve its losses quarter-on-quarter. It had a loss of Rs 112.59 crore in the second quarter ending September 30, 2020.
Not just that. There are a few more sets of numbers that show the airline, and perhaps the overall aviation sector is recovering from the dent of COVID-19. Just to recollect, domestic aviation resumed in May, and since then has opened up gradually. As of now, the government allows airlines to operate 80 percent of capacity.
SpiceJet is now operating at 72 percent of its pre-COVID-19 schedule. That is a good jump from the 52 percent it had reported in the September quarter. Industry leader IndiGo had said its capacity was at 70 percent at the end of the year and hovered around 80 percent in January.
SpiceJet's load factor, at 76.8 percent, is the industry's highest.
Cargo operations remain the star, despite volumes dropping marginally to 41, 257 tons in Q3, from 42,000 tons in Q2. Quarterly growth in revenue also dipped, 36 percent in Q3 from 39 percent in Q2.
The airline now has 19 cargo aircraft, that have helped it take a lead in vaccine delivery. The company has transported 13.2 million doses of COVID-19 vaccines.
Its total fleet now stands at 100, with the induction of an Airbus A321. The airline has been busy expanding its network, adding 92 new domestic and 16 international flights during the quarter.
What are the concerns?
Despite the better showing, SpiceJet's auditors continue to cast a doubt on the company's ability as a going concern.
The net worth continues its slide in the negative territory, expanding from Rs 2,286 crore in the second quarter, to Rs 2,343 crore in the third.
Not just that. The company was again helped by the 'Other Income' to limit its losses. And these mostly come from the readjustment of the claims expected from aircraft manufacturer Boeing. SpiceJet has 13 of the grounded 737 Max aircraft, which since then have been cleared by some of the regulators. In India, the clearance is still awaited.
SpiceJet has accounted Rs 140 crore as claims in Q3. In total, it has now made a claim of about Rs 1,090 crore. If not for the other income, which also includes foreign exchange loss on the restatement of Rs 10.61 crore, the airline's losses would have been higher in the quarter.
"The Boeing compensation numbers are what the airline unilaterally assumes and books as revenues. There is no agreement reached with Boeing yet on compensation and what form it will take. Therefore this is imagined revenues for now. Auditors have been noting their discomfort with these assumptions each quarter," said a senior executive from the industry.
The compensation, the executive added, if and when it finally comes, may not even be in the form of direct cash or revenues. "It may be in the form of discounted parts, services, simulators or training; which will reduce some future costs, but none of which is revenue," the executive added.