Q3 Results: SpiceJet’s Profit Tumbles On Higher Expenses

SpiceJet Ltd.’s profit tumbled 77.1 percent in the December-ended quarter, hurt by higher expenses on account of rising crude oil prices and rupee depreciation.

The budget carrier reported a net profit of Rs 55 crore in the three-month period, compared with Rs 240 crore in the same period a year ago, according to its regulatory filing. Revenue, however, rose 20.2 percent year-on-year to Rs 2,487 crore in the quarter.

The airline incurred higher expenses due to a 34 percent increase in crude oil prices and 11 percent depreciation of the Indian rupee against the U.S. dollar, SpiceJet said, adding that the combined effect of these cost escalations was approximately Rs 329 crore. Expenses per available seat kilometers increased by 14 percent, it said.

Operating income, or earnings before interest, tax, depreciation and amortisation, slipped 19.7 percent to Rs 456 crore in the quarter, while margin contracted to 18.35 percent from 27.48 percent.

• Capacity increased 16 percent
• Growth in passenger yields went up by 8 percent
• Achieved a record passenger load factor of 91.6 percent
• Fuel bill rose to Rs 968.3 crore, from Rs 631 crore a year ago

Despite the rise in volumes, the airline had trouble maintaining its margin, IndiaNivesh Securities Ltd.’s Head of Retail Research Dharmesh Kant told BloombergQuint, adding that if any airline fails to maintain its margin, the sensitivity is really high no matter how much volume uptake is seen.

“The [airline] sector is very sensitive to the crude oil volatility,” Kant said, adding that if the crude oil prices rise again, the airlines might start posting losses.

The Airports Authority of India had served a notice to the company in November last year to pay Rs 20 crore by the end of that month to partially clear its dues, newswire PTI had reported citing sources.

Shares of the low-cost carrier ended 2.4 percent higher to close at Rs 80.30 apiece after the results were announced.