Mumbai/New Delhi: SpiceJet on Tuesday posted a 22% rise in net profit at Rs 56.3 crore in the three months ended March as higher fares helped the airline amid a capacity crunch in the domestic aviation market.
The no-frills carrier, which now has 100 planes in its fleet, had a net profit of Rs 46.2 crore in the March quarter of 2018.
During the three months ended March 2019, average fare went up by 11%, the airline said. It expects the ticket prices to remain higher till December.
The collapse of Jet Airways has resulted in lower seat capacity while pushing air ticket prices up, starting from the March quarter.
SpiceJet is the second domestic carrier to post a profit after IndiGo in as many days.
SpiceJet Chairman and Managing Director Ajay Singh said the airline has seen a strong recovery in the last two quarters after suffering a loss of Rs 427.5 crore in the first two quarters due to a steep increase in fuel costs and sudden depreciation of the rupee.
“This recovery comes despite the unprecedented challenges we faced during the March quarter which saw the grounding of as many as 13 of our MAX planes,” he said in a release.
In the latest March quarter, revenue from operations jumped 25% to Rs 2,477.75 crore. In the year-ago period, the same stood at Rs 1,995.04 crore.
However, the airline reported a net loss of Rs 316.1 crore for the year ended March 2019. In the comparable period, it had a profit of Rs 566.66 crore.
SpiceJet’s Chief Financial Officer Kiran Koteshwar said yields maintained at good level was one of the reasons for good results in the March quarter. Generally, yield refers to the average fare paid per passenger. He said that fares are likely to spike further since the capacity that has gone out of the market was not small.
Flight cancellations and subsequent grounding of cash-starved Jet Airways in April have significantly impacted the available seat capacity in the domestic aviation market. The situation has pushed the fares higher.
“Our view is that the yields which we are seeing now, the premium yields will stay for some more time… It could go up to December,” he said.
When asked whether fares would remain higher till the end of this year, he said that was the expectation.
“This is our core expectation and it is purely mathematical in nature… You can’t add 80 aircraft in the next one or two months,” he added.
About 80 planes had gone out of the market due to the grounding of Jet Airways.
According to Koteshwar, SpiceJet has secured 30 planes starting from April end. Out of them, 22 have been inducted and the remaining ones would be inducted in the 8-10 days.
“It is a process and that is why conservatively till the process is over we cannot record the compensation… It is definitely expected,” he said about compensation to be received for grounding of Boeing 737 MAX planes.
SpiceJet has grounded 13 MAX aircraft after a directive from aviation regulator DGCA in the wake of a plane crash that killed 157 people in Ethiopia in March.
“With a massive fleet expansion this fiscal, a favourable operating environment, a likely return of the B 737 MAX (planes) in July, significant improvements in yields and prime slots at key airports, we are confident of a strong performance for FY 2020,” Singh said.
The airline’s air cargo arm SpiceXpress has also launched freighter service on the Guwahati-Hong Kong sector.
Noting that there is huge potential in the North East market, SpiceJet said it plans to connect all the seven North Eastern states with Guwahati., thereby building the latter into a cargo hub for the entire region.
“Currently the freighter fleet comprises of two Boeing 737NG Freighters and four more are expected to be added during FY 2020,” the release said.
On Monday, IndiGo’s parent InterGlobe Aviation posted higher profit after tax of Rs 589.6 crore, mainly on the back of higher passenger revenues and cancellation of Jet Airways flights.
Not so long ago in December 2014, SpiceJet was in very bad shape when some public sector banks relaxed their lending rules to offer loans to SpiceJet.