Indian no-frills SpiceJet on Tuesday reported a consolidated profit of INR 42.45 crore ($5.64 million) for the October-December 2021 quarter on the back of higher passenger traffic and improved performance of the cargo business of the airline. The carrier reported a consolidated loss of INR 66.78 crore ($8.87 million) during the same period a year ago.
The total income in the December quarter for the airline climbed to INR 2,677 crores ($355.7 million) compared to INR 1870.6 crore ($248.5 million) in the same period a year ago, according to regulatory filings made by the company.
On a standalone basis, the airline recorded a profit of INR 23.28 crore ($3.09 million) for the third quarter of the current fiscal year. During the corresponding period of last year, it had a standalone loss of INR 56.96 crore ($5.57 million)
SpiceJet chairman and managing director Ajay Singh said he was happy that the airline reported a “…profit in Q3 of the current fiscal driven by excellent logistics operations, rebound in passenger traffic and various accommodations from aircraft manufacturer and lessors.“
He further said that “the passenger industry witnessed the much-needed turnaround in the third quarter as Coronavirus cases ebbed in the first half of the quarter, travel picked up significantly and there was finally hope that the worst was behind us. However, that changed by the second half of December as Omicron halted that recovery.
“Our performance would have been much better but was impacted by the unexpected delay in the return to service of the 737 MAX, rising fuel costs, and certain exceptional adjustments. I am happy to say that there are renewed signs of recovery in the passenger segment and the logistics segment continues to remain strong,” he noted.
The settlement with Boeing was a significant event during the quarter. The company received cash and non-cash accommodations in excess of the amounts due to lessors during the period of grounding of MAX aircraft, SpiceJet said in its regulatory filings. Accordingly, basis the various accommodations agreed with Boeing and their 737 Max aircraft lessors, SpiceJet has claimed to recognised these amounts under the head ‘other income’.
The filing reads: “To reflect the true operational parameters of its operating fleet, the management of the Company recognised claims recoverable for such expenses which accumulated to Rs.15,549.03 million ($206.68 million) till 30 September 2021 under the head ‘other income’ in respective quarters as the management was confident about the recoverability of its claims since the grounding of these aircraft.”
The company incurred a one-time exceptional adjustment of INR 77 crore ($10.23 million) on account of the settlement with De Havilland of Canada.
SpiceXpress, the logistics subsidiary, continued its growth trajectory reporting increased revenue of INR 584 crore ($77.63 million) for the reported quarter as compared to INR 498 crore ($66.20 million) in the quarter, a jump of 17%. The company plans to significantly increase freighter capacity in the coming quarter.
India’s largest airline IndiGo, India’s biggest carrier, also reported a profit in the same quarter. SpiceJet, which controls 10.3% of the Indian market, was overtaken by Go Airlines India Ltd. in December 2021 as India’s second-largest airline.
A dispute with the former owner, Kalanithi Maran, over share transfers is another challenge the airline needs to manage. Maran and his parties have refused to accept Spicejet’s INR 600 crore ($79.74 million) payment offer on Monday and sought a higher settlement. SpiceJet had to postpone their result announcement by a day. SpiceJet has also faced recent turbulence with a significant institutional shareholder who disagreed with SpiceJet’s accounting practices.
Ajay Awtaney is the Founder and Editor of Live From A Lounge (LFAL), a pioneering digital platform renowned for publishing news and views about aviation, hotels, passenger experience, loyalty programs, travel trends and frequent travel tips for the Global Indian. He is considered the Indian authority on business travel, luxury travel, frequent flyer miles, loyalty credit cards and travel for Indians around the globe.