SpiceJet Q1 profit rises 18% to Rs175 crore on higher airfares

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New Delhi: SpiceJet Ltd, India’s second largest low-fare airline, said its first quarter profit for the current fiscal rose 18% on higher fares and better seat occupancy.

Net profit rose to Rs175.2 crore in the three months ended 30 June, from Rs149 crore in the last fiscal, the airline said on Thursday.

Revenue rose 22.4% to Rs1,889.46 crore from Rs1,543.96 crore in the year-ago period.

“This is the first time we have seen a reverse swing where fares grew,” chief financial officer Kiran Koteshwar said, referring to the trend prevailing in the past few quarters of falling fares.

Fares rose 9% in the June quarter from a year earlier. The airline’s average realization per passenger rose to Rs3,943 from Rs3,601.

Fuel prices, however, rose to Rs38 a litre on average this year from Rs33 a litre in the year earlier.

This led to a 4% increase in cost per available seat kilometer to Rs3.75 from Rs3.59.

The airline was also able to generate more ancillary revenue from items such as food sales and seat selection, making up 12% of total revenue as compared to 2% in the year earlier.

The airline, which has 55 planes in its fleet and a 13% share of the domestic market, launched regional flights under the government’s Udan scheme.

“We had an eventful quarter as we took off under the Udan scheme and launched operations on two routes,” said Ajay Singh, chairman and managing director, SpiceJet who turned around the airline from a near shut down in 2015.

The airline will expand its fleet to 39 Boeing planes and 22 Bombardier Q400s by the calender year end, from 35 Boeing planes and 20 Q400 planes at the end of June.

SpiceJet also plans to add nine Boeing 737s and six Q400s in 2018.

SpiceJet said a lot of demand was coming from Tier-II cities such as Amritsar, Chandigarh, Ahmedabad, Pune, and Surat, and that it was not worried about rival airlines introducing regional flights.

“We have a superior plane and we have the first-mover advantage with 20 planes already in that market, plus there is so much growth,” Koteshwar said.

The Supreme Court has asked SpiceJet to deposit a sum of Rs579 crore in a share transfer dispute arising out of a change in the airline’s ownership in 2015 with the airline’s former owner Kalanithi Maran and his firm KAL Airways.

Koteshwar said the money has to be deposited by 15 September and the airline will comply with the order.

He said the airline will take a call in the next few days whether to use bank guarantees or internal resources for depositing the amount.

The airline currently has about Rs350 crore of cash.

Rival InterGlobe Aviation Ltd-run IndiGo too saw a 37% increase in net profit to Rs811.14 crore for the quarter ended June.

Jet Airways Ltd is expected to announce its earnings over the next few weeks.

The SpiceJet stock fell 5.18% on BSE to Rs119.05 on a day the Sensex shed 0.84% to end at 31,531.33 points.

The earnings were announced after the end of trading on Thursday.

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