Sunday, August 11, 2019

SpiceJet posts record profits: Inside story of the remarkable turnaround

Four-and-a-half years ago, who would have thought SpiceJet, then struggling to remain operational, would emerge as one of India's most profitable airlines.

The Ajay Singh-promoted airline's return flight to profits in the first quarter comes at a time when the giants of Indian skies are either shutting down or burdened with huge debt.

The no-frills carrier, which posted a net loss of Rs 316 crore last financial year, has in the last one quarter done the unthinkable.

It has posted a record profit, expanded its fleeting at an unprecedented pace, increased its market share and posed a challenge to the dominance of the country's largest carrier IndiGo.

Its share price too has zoomed - from Rs 80.30 on February 11 to Rs 137.95 as of close on Friday, a nearly 72 per cent rise in a little over six months.

With good reason. SpiceJet reported its highest-ever quarterly profit at Rs 261.7 crore for the June quarter of FY20 (Q1FY20), as against a loss of Rs 37.9 crore in the June quarter of FY19.

So, what did the trick? Simple. It flew more passengers and managed to earn better returns per seat in the wake of the collapse of Jet Airways. The airlines shared that passenger fares in the quarter were up 11 per cent year-on-year.

This meant operating revenues were at Rs 3002.10 crore against Rs 2220.40 crore for the corresponding quarter last year. On an EBITDA basis, profit is at Rs 747.50 crore as against Rs 100.50 crore for the corresponding quarter last year.
10/08/19 Arshad Khan/New Indian Express
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