SpiceJet net profit quadruples in Q3 on higher demand, fares
2 min read . Updated: 24 Feb 2023, 11:52 PM IST
Premium- The December quarter is traditionally strong for airlines as the onset of festivals and the holiday season boosts air travel
SpiceJet Ltd unexpectedly reported a four-fold jump in earnings to ₹106.8 crore for the December quarter thanks to robust demand and higher fares, driving the low-fare airline’s shares up 12.3% on Friday.
Profit for the quarter was driven by passenger operations rather than cargo operations, unlike the year-earlier December quarter. While revenue from air transport services rose 31% to ₹2,202 crore, revenue from freighter and logistics services, SpiceXpress, fell 80% to ₹119.6 crore.
The December quarter is traditionally strong for airlines as the onset of festivals and the holiday season boosts air travel. The quarter also saw a steep rise in airfares on record passenger demand and helped Indian airlines such as IndiGo report a record profit, and privately held Vistara said it has broken even for the first time since inception.
For SpiceJet, total income from operations rose 6% to ₹2.829.5 crore in the quarter. Of this, total revenue from operations stood at ₹2,314.6 crore, and other income was at ₹514.9 crore. The airline has credited the other income to the settlement with Boeing for 13 grounded MAX aircraft and waiver of lease rentals on some aircraft, which were showing technical issues and were then returned during the period.
Total expenses for the quarter rose by 5.6% to ₹2,722.7 crore. Despite a jump in passenger traffic, business continued to be impacted by high fuel prices and the depreciating rupee, SpiceJet said. However, it expects travel demand to continue in 2023.
“There are renewed signs of recovery and some very positive developments and restructuring initiatives in the immediate offing that would significantly strengthen and deleverage our balance sheet," chairman and managing director Ajay Singh said.
The airline received about ₹211 crore under the Emergency Credit Line Guarantee Scheme (ECLGS) so far. It has also been in talks with aircraft lessor Carlyle Aviation to offer a 5% stake. According to the proposal, Carlyle Aviation will convert a majority or around 75% of $100 million dues of SpiceJet into compulsorily convertible debentures in SpiceXpress, and the remaining amount will translate into over 5% equity in SpiceJet, Mint reported on 23 February.
The company’s board will meet again on 27 February to consider the sale of shares on a preferential basis.