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SpiceJet loss widens to Rs 789 crore in June quarter; plans to raise $200 mn

SpiceJet loss widens to Rs 789 crore in June quarter; plans to raise $200 mn

In continuing woes for the carrier, aviation watchdog DGCA on Wednesday deregistered two more Boeing 737 planes of SpiceJet, following non-payment of dues to lessors.

SpiceJet plans to raise $200 million, and expects to complete the hiving-off of its profitable cargo business SpiceJet plans to raise $200 million, and expects to complete the hiving-off of its profitable cargo business

SpiceJet, which is facing headwinds, on Wednesday reported widening of net loss to Rs 789 crore in the June quarter as high fuel prices and rupee depreciation adversely impacted the budget carrier. Amid the financial turmoil, the airline plans to raise USD 200 million, which is around Rs 1,600 crore at current exchange rates and expects to complete the hiving-off of its profitable cargo business into a separate company in the current quarter.

In continuing woes for the carrier, aviation watchdog DGCA on Wednesday deregistered two more Boeing 737 planes of SpiceJet, following non-payment of dues to lessors. With the latest deregistration, a total of six Boeing 737 aircraft of the budget carrier have been deregistered in August.

The crisis-hit airline has also delayed payment of salaries to staff for the second straight month. However, SpiceJet said it has started crediting salaries from today and like the previous month, "salary will be credited in a graded format".

Moreover, in the independent auditor's review report of the airline's latest quarterly results, it has been mentioned that there are indications of material uncertainties "that may cast significant doubt about the group's ability to continue as a going concern".

On Wednesday, the airline also said that its Chief Financial Officer Sanjeev Taneja has resigned.

The low-cost carrier had a net loss of Rs 729 crore in the quarter ended June 2021. In the latest June quarter, the net loss is Rs 420 crore, excluding forex adjustment.

"Total revenue for the reported quarter was Rs 2,478 crore as against Rs 1,266 crore, a year-on-year growth of 126 per cent, in the same quarter of the previous year," the airline said in a release.

The airline, which had delayed its March quarter and FY2022 earnings, saw its net loss widen to Rs 458 crore in the 2022 March quarter from Rs 235.3 crore in the year-ago period.

For the full fiscal year 2021-22, the net loss surged 73 per cent to Rs 1,725 crore from Rs 998.30 crore in the comparable period.

According to the airline, business was severely impacted by the third wave of the coronavirus pandemic and high fuel prices in the March quarter.

SpiceJet Chairman and Managing Director Ajay Singh said the industry has been witness to one of the most severe operating environment in the recent past, which impacted the progress and recovery made in the third quarter of FY2022.

In the June quarter, jet fuel prices rose 105 per cent on a year-on-year basis and 40 per cent on a sequential basis, the airline said.

"We are optimistic about our future and our continued recovery and in order to achieve our future plans, the board has mandated fresh capital issuance and the company will be shortly engaging with investment bankers for a potential raise of up to USD 200 million," he said.

The airline's cargo arm SpiceXpress was in black during the first quarter of the current fiscal. It reported a net profit of Rs 18 crore.

Cargo revenues rose 74 per cent to Rs 1,944 crore in FY2022.

"We will soon conclude the hive-off of cargo business into a separate independent company, SpiceXpress in the current quarter which will be followed by capacity enhancement with additional freighter aircraft within FY2023," Singh said.

Meanwhile, certain concerns have been flagged in the independent auditor report of the company's quarterly results.

"... the group has an incurred net loss (after other comprehensive income) of Rs 7,827.82 million during the quarter ended 30 June 2022 and, as of that date, the group's accumulated losses amounts to Rs 67,471.11 million, which have resulted in complete erosion of its net worth and the current liabilities have exceeded its current assets by Rs 67,719.67 million as at 30 June 2022," it said.

According to the report, these conditions and other matters indicate the existence of a material uncertainties that may cast significant doubt about the Group's ability to continue as a going concern.

Singh said that despite the complex operating environment and highest-ever input costs, SpiceJet has been able to sustain its operations.

"Last year was a period of restructuring and settlements and we successfully completed and implemented settlements with most of our major partners, including manufacturers and lessors setting the stage for our seamless growth and expansion.

"As we move ahead, we are encouraged with the strong travel demand and our focus for the next year would be to induct more fuel-efficient Boeing 737-8 MAX aircraft and concentrate on our regional and international routes," he added.

In recent months, SpiceJet has been facing turbulent times, including financial headwinds. In July, the regulator directed the airline to operate only 50 per cent of flights in the wake of many of its planes facing technical issues.

Also read: SpiceJet CFO Sanjeev Taneja resigns as losses widen

Also read: SpiceJet settles Boeing aircraft lease dispute with Goshawk, others

Published on: Sep 01, 2022, 7:44 AM IST
Posted by: anwesha madhukalya, Sep 01, 2022, 7:38 AM IST