SpiceJet defies rising fuel prices to post an increase in Q4 profit

Low-cost airline SpiceJet reported a resilient set of numbers for the Jan-Mar quarter despite increasing fuel prices, posting its 13th quarterly profit in a row.

Despite worries over rising crude prices, the company managed a slight increase in its net profit to Rs 40.5 cr from Rs 38.6 cr a year ago. SpiceJet said the higher crude price took away Rs 81.4 cr from its bottom line.

This was made possible by higher revenue, which was in turn due to higher pricing and higher occupancy.

Total expenses in the quarter increased by Rs 415 cr, or 25.4%, to Rs 2,049 cr compared to last year, with higher fuel costs contributing Rs 223 cr to the increase, employee expenses contributing another Rs 42 cr and ‘other expenses’ contributing Rs 66 cr to the increase.

However, it was able to tide over this increase of Rs 415 cr in expenses with the help of an increase of Rs 417 cr (25%) in its revenue, including non-operating income.

The company’s net operating income rose by 24.2% to Rs 2,005 cr. Out of this 24% growth, about 8% was due to higher yield (price increase), while the remaining was due to higher volumes (passengers carried). Rival Indigo had reported a decline in yields in the quarter.

“For three years in a row, SpiceJet has flown with the highest load factors in the Indian aviation market and for 35 months in a row the loads have been in excess of 90%, a feat unparalleled globally,” the company said.

The quarter also witnessed the airline ink a $12.5 billion agreement with CFM International for the purchase of LEAP-1B engines to power its 155 Boeing 737 MAX fleet, along with spare engines.

“Despite rising fuel prices, SpiceJet continues to record profits and has recorded the highest annual profit in its history,” said Chairman and Managing Director Ajay Singh.

“With the fuel efficient B737 MAX joining our fleet in the coming months we will continue to expand at home and abroad and strive to improve profitability and operating performance,” he added.

The company was more or less written off under its previous owner due to mounting losses, but was reacquired by its founder about three years ago.

Singh noted that the company has remained profitable for three years in a row.

“From scripting one of the biggest aviation turnarounds to three successive profitable years, record aircraft orders, industry’s highest load factor, high on-time performance, the airline has indeed come a long way and emerged as the country’s largest regional operator,” Singh said.

The company said it was able to absorb the higher fuel costs due to the increase in yield and high load factors.