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SpiceJet bounces back to black, posts net of R56 cr

Beating market expectations, SpiceJet, the Kalanithi Maran-promoted lowcost carrier, on Monday posted a net profit of R56 crore in the quarter ended June 30, the first profitable quarter for the airline after reporting losses in five consecutive quarters.

Beating market expectations, SpiceJet, the Kalanithi Maran-promoted lowcost carrier, on Monday posted a net profit of R56 crore in the quarter ended June 30, the first profitable quarter for the airline after reporting losses in five consecutive quarters. SpiceJet had reported a net loss of R71.96 crore in the same period last fiscal.

The markets responded favourably to the financial results posted by SpiceJet as its shares jumped 22.42% on BSE on Monday to close at R30.85 after having hit an intra-day high of R31.45. As a result, the share prices of rival airlines also ended in the green. Jet Airways closed at R347.50, up 7.72% while the Kingfisher stocks rose 2 % and closed at R9.64.

The profitable first quarter for the low-cost carrier was mainly driven by new routes and increased load factor, Neil Mills, chief executive officer of SpiceJet, said.

The airline sales also went up 51% in Q1 at R1,406.74 crore against R930.75 crore in the same quarter last year. The higher revenues come despite a marginal increase in the load factor, which grew from 78.9% in Q1 last year to 80.3% this fiscal.

Its average revenue per passenger in the quarter increased 24% and the number of passengers it carried during the period also increased by 26%, the airline said.

?Our market share has increased by 1.5 percentage points to 18.6% during the quarter and it has nothing to do with the crisis at any other carrier. We have been adding new routes to out network with the new Bombardier Q400 and most of these routes are giving good returns,? Mills said, adding that the high cost of operations influenced by a weak rupee and airport charges have prevented the company from posting even better results. ?The rupee factor and over-taxation poses big challenge. We have asked the government to do something about it,? he said.

The rise in fuel prices and airport charges have restricted the margins of all the airlines in the country. Even though fuel prices in the international market have softened in recent weeks, the carriers have not been able to realise the benefits. The carrier is now looking at adding more routes. It plans to fly to Riyadh, Hong Kong and Bangkok by the end of October, said Mills.

?SpiceJet will continue to do well in the next quarter as well because of the lower capacity in the market coupled with a possible fare increase,? Sharan Lillaney, research analyst at Angel Broking said.

Overall, the Indian aviation sector is reeling under debt of around $20 billion. Last year, the aviation sector together posted a combined loss of $2 billion, led by higher fuel and airport expenses and below-cost fares, analysts said. Except IndiGo, India?s leading low-fare airline, every other carrier lost money.

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First published on: 31-07-2012 at 02:14 IST
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