Higher yields swing SpiceJet into Rs 102 crore profit in Q3

Low-cost airline SpiceJet flew back into black with the December quarter profit jumping to Rs 102 crore, against a net loss of Rs 39.3 crore a year ago, on the back of higher revenue and stable oil prices.

As of December, the airline controlled 19.2 per cent of the domestic passenger market share, which was 16.80 per cent a year ago.

As ticket prices remained high during the quarter, the Chennai-based carrier said its average passenger yields rose a full 29 per cent.

This brought 37 per cent revenue spike from operations to Rs 1,603 crore compared to Rs 1,173 crore a year ago. The yields from passengers rose to Rs 4,412, up 29 per cent from Rs 3,421 a year ago, significantly boosting profit.

The news sent its shares rallying as much as 7.6 per cent on Bombay Stock Exchange and settled today gaining 5.01 per cent at Rs 46.15.

Describing the numbers as "quite robust", chief executive Niel Mills told PTI that the airline focus on better revenue realisation from operations and route rationalisation helped it report healthy numbers.

Another reason is the better fleet optimisation and an altered route mix (thanks to more international flights) coupled with higher yields, fuel cost as a proportion fell to 45 per cent of the total revenue in the current quarter as against 50 per cent a year ago, Mr Mills said.

"Also, diversification into newer markets helped us secure revenues and higher yields. The new routes netted us Rs 100 crore in revenue during the quarter," he said.

To announce a profit of Rs 102 crore for the third quarter in the current challenging environment is a huge achievement and clearly demonstrates that the strategic changes SpiceJet have made in the last two years has created a platform for our future success, he further said.

He said the international operations contributed 7 per cent to the overall revenue basket during the quarter, and the target is to get 20 per cent of revenues within the next 18 months from international operations.

The international operations saw an 80 per cent increase in the number of passengers, while the growth in number international departures jumped 129 per cent, Mr Mills said.

"Notwithstanding the all-round improvement, the fact remains that the industry continues to bear the brunt of extremely high incidence of taxation on fuel which averages at 24 per cent, making it among the highest in the world and acts as the biggest hurdle for the industry's long-term profitability," he warned.

During the quarter, the airline recorded 7 per cent growth in number of passengers, while the growth of available seat kilometres rose 18 per cent and the number of departures grew a full 25 per cent.

Its regional operations recorded an 82 per cent growth in the number of passengers, while the departures posted a higher 89 per cent growth.

On revenue from the last week's ultra-low fare scheme, Mr Mills said, they sold 7,05,000 tickets in three days but refused to share the revenue. But, it has been learned that the airline netted a huge Rs 165 crore.

Describing the promo as a tactical one, Mr Mills said he is looking at garnering 20 per cent ticket sales through such promotions.

When sought his fuel outlook, he said it still is a big challenge and in a country like ours every airline has to live with this.

On the much-delayed ATF import, for which SpiceJet was the first to secure a licence last April, he said he has been waiting for the past six months or so to clear one last bureaucratic hurdle.

"As and when this one bureaucratic issue is resolved, I can start shipping in ATF from the very next day, as I have all the commercial arrangements, like vendors, shippers, storage facilities, etc already in place," he said.

However, Mr Mills did not name any of the partners and the government department where the issue has got stalled. SpiceJet currently operates over 330 daily flights to 42 domestic cities and seven international destinations- Dubai, Colombo, Guangzhou, Kabul, Kathmandu, Male and Riyadh.