India’s fourth-largest airline by market share, SpiceJet, is back in the black, reporting a profit of Rs 407 crore in the just concluded financial year, 2015-16. The airline had reported a loss of Rs 687 crore in the previous fiscal.
Led by New Delhi-based industrialist Ajay Singh, SpiceJet has flown back into profitability after four consecutive fiscals. The financial year 2011 was the last time when SpiceJet reported an annual profit of Rs 101.16 crore on revenues of Rs 3,934.39 crore.
In fact, ever since Singh took over the reins of SpiceJet from Chennai-based billionaire and media mogul Kalanithi Maran early last year, the airline has been reporting profits on a quarterly basis.
One of the key drivers of profitability has been the fact that global crude oil prices have dropped from $70 a barrel to $50 a barrel, over the last 12-15 months. In January this year, oil prices had bottomed to about $35 a barrel.
In the financial year under review, SpiceJet’s fuel expense fell by 73.1 percent to Rs 1,391.95 crore from Rs 2,409.62 crore reported in the year-ago period. The airline reported revenues of Rs 5,088 crore, a 3 percent dip over the previous fiscal, as it reduced its overall deployed capacity by 11 percent over the same period.
“We had inherited a deeply distressed company last year. We are delighted that we have made significant progress both financially and operationally, and have significantly strengthened our balance sheet,” said Ajay Singh, chairman and managing director, SpiceJet Limited. “This turnaround, unparalleled in the history of Indian aviation, would not have been possible without the support of my colleagues at SpiceJet and all our partners.”
The airline’s net profit in the January to March fourth quarter stood at Rs 73 crore on a revenue of Rs 1,475 crore. The airline said it accounted for a one-time expense of Rs 173 crore, which was towards “stabilising and improving” the reliability of its fleet. Despite this provisioning, it saw its profit zoom by 225 percent over the same quarter in the year-ago period.
Besides the benefits of lower fuel costs, Singh had focussed on driving up operational efficiencies, which has resulted in the airline’s operating revenue per available seat kilometre (ASKM) register a growth of 21 percent over the same quarter last year.
This is the fifth consecutive profitable quarter for SpiceJet since the challenges it faced —it was on the verge of shutting down — in December 2014. The airline said it has been recording passenger load factors of over 90 percent consistently over the last 11 months.
SpiceJet’s shares on Thursday ended at Rs 79.55 apiece, down by 4.62 percent over the previous day’s close, while the benchmark index Sensex was down 1.19 percent.