SpiceJet's Turbulent Quarter: Losses Deepen as Fleet Remains Grounded
Low-cost carrier SpiceJet Ltd reported a significant widening of its net loss for the July-September quarter, with the deficit climbing approximately 36% year-on-year to ₹621 crore. This financial setback was primarily driven by substantial foreign exchange losses and the continued grounding of a significant portion of its aircraft fleet for maintenance.
Financial Performance and Contributing Factors
The airline's financial health deteriorated compared to the previous quarter, where it posted a loss of ₹234 crore, and the year-ago period, which saw a loss of ₹458 crore. Compounding the problem, revenues declined sharply, falling 30% from the preceding quarter and 15% from the same period last year, to settle at ₹730 crore.
In an exchange filing on Wednesday, the Ajay Singh-promoted airline highlighted a massive foreign exchange loss of ₹190 crore, a stark reversal from the ₹5 crore gain it recorded a year earlier. This underscores the continued pressure from dollar-denominated lease payments, which become more expensive as the Indian rupee weakens.
The company attributed the poor results to a combination of factors: the non-operation of a part of its fleet awaiting maintenance, existing airspace restrictions, and the adverse impact of a weaker rupee against the US dollar. During the June quarter, 35 out of its 56 aircraft were grounded, though the airline did not disclose the operational fleet size for the September quarter.
Analyst Outlook and Path to Profitability
According to Gagan Dixit, an analyst at Elara Capital, SpiceJet's journey back to profitability is directly linked to its fleet size. "SpiceJet will need to take its fleet size to 50 and above for it to turn profitable," Dixit stated. He noted that the December quarter is seasonally stronger and may show some improvement, but for sustained recovery, the airline must unground aircraft or ensure new supplies to reach the ideal operational fleet.
On the cost front, there was a mixed bag. Aviation turbine fuel costs for the country's fourth-largest airline, which holds a 2% market share, saw a 19% sequential decline to ₹312 crore. Lease rentals witnessed a dramatic 80% drop to ₹20 crore, while maintenance costs remained relatively flat at ₹165 crore compared to the previous quarter.
Industry Context and SpiceJet's Revival Efforts
The July-September period is traditionally a seasonally weak quarter for the airline industry. Data from the Directorate General of Civil Aviation (DGCA) confirmed a decline in passenger numbers across all three months.
In a significant move to stage a comeback, SpiceJet has raised ₹4,172 crore through a preferential allotment of equity warrants and shares to non-promoter investors. The airline plans to use these funds to revive grounded aircraft, rationalise its fleet, and expand into new sectors.
The company is also actively implementing cost-control initiatives and is engaged in settling dues with vendors and lessors. "The management is confident that the company will be able to settle its liabilities with vendors / lessors as they fall due," the airline assured.
Showing early signs of a push towards normalization, SpiceJet boosted its winter schedule operations starting 26 October, with weekly domestic departures up over 20%. The airline has inducted five additional aircraft on a damp lease, bringing the total new fleet additions to 10. As of 12 November, the airline had 30 aircraft in operation, and it has previously stated an aim to more than double this operational fleet.
