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High fuel costs, weak rupee bring SpiceJet profit down 77% to Rs 55 crore

SpiceJet on Monday reported a 77% year-on-year decline in profits to Rs 55 crore during the December quarter owing to high fuel expenses and a weak rupee.

The low-cost carrier recorded 20.2% year-on-year jump in operating revenue to Rs 2,487 crore, but it was significantly offset by the increase in operating expenses. While its passenger count increased 8.2% y-o-y in Q3FY19, the yield was up 8% y-o-y compared with Q3FY18.

SpiceJet’s fuel costs rose 53.4% to Rs 968 crore for the quarter ending December 2018. Operating expenses such as aircraft lease rentals and maintenance costs — both dollar-denominated items — soared due to rupee depreciation vis-a-vis dollar. The value of rupee depreciated around 9% y-o-y in the comparable period.

The earnings before interest, tax, depreciation, amortisation and rentals (Ebitdar) slipped 16.2% y-o-y to Rs 500 crore in the quarter, while margin contracted to 19.7% from 28%. According to analysts, the average fares during the quarter were up 6.3% y-o-y.
SpiceJet stock closed on Monday’s session at Rs 80.3, up by 2.4%, on the Bombay Stock Exchange (BSE). The airline had reported a loss of Rs 389 crore in Q2FY19.

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The Gurgaon-based carrier spent Rs 343 crore on paying aircraft lessors, up 30% y-o-y during Q3FY19. Its maintenance costs witnessed a similar rise to Rs 385 crore. Net profits at SpiceJet stood at Rs 240 crore during Q3FY18.

SpiceJet’s domestic market share in Q3FY19 slipped to 12.2% against 12.8% in the same period last year. Its added capacities to the tune of 16% y-o-y to 5.7 billion km. The airline took deliveries of 12 new aircraft — nine Boeing 737 MAX 8 and three Q400s during the December quarter.

“The new generation 737 MAX aircraft with its cost efficiencies and increased revenue opportunities will become a substantial portion of our Boeing fleet, further improving our margins. The increased seating capacity on the Bombardier Q400s will also result in improved margins,” chairman and managing director Ajay Singh said.

According to Indian Oil Corporation, the average aviation turbine fuel price was Rs 72,900 per kl during the October-December period against Rs 54,900 per kl a year ago, up 33% y-o-y.

At the end of Q3FY19, SpiceJet’s fleet size stood at 74 which included 37 Boeing 737 Next Generation aircraft, 10 737 MAX 8, 26 Q400s and one B737 freighter.

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Source: Financial Express