SpiceJet Posts Fourth Straight Loss on More CompetitionAnurag Kotoky and Adi Narayan
Debt-laden SpiceJet Ltd. posted its fourth straight quarterly loss, as the Indian budget-carrier continued to struggle amid intensified competition, rising expenses and below-cost fares.
SpiceJet lost 1.24 billion rupees ($20 million) during the three months ended June 30, compared with a profit of 505.6 million rupees during the same period a year earlier, it said in a statement today.
The carrier, majority owned by billionaire Kalanithi Maran, has said that debt had erased its net worth. It has fallen behind in paying dues to airports, has restructured aircraft deliveries and faces fresh competition from AirAsia Bhd.’s new Indian low-cost venture.
SpiceJet shares rose 6.5 percent today to 11.98 rupees in Mumbai. They have declined 32 percent this year, compared with the 23 percent advance in the S&P BSE Sensex Index and the 19 percent drop in Jet Airways India Ltd.
SpiceJet’s sales were little changed at 16.8 billion rupees, even as it cut its fleet by five aircraft, according to the statement. India’s low-cost airlines are locked in a price war and SpiceJet offered basic fares starting at 1 rupee in April.
India is one of the world’s most expensive markets for airlines, and carriers have lost a combined 594 billion rupees over the past seven years, Sydney-based civil aviation think tank CAPA estimates. Over that period, airlines have lost an average $22 every time a passenger stepped on board, according to CAPA.
SpiceJet’s operating costs rose 3.2 percent driven mainly by fuel cost increases and exchange rate changes, it said. State taxes of as much as 30 percent mean carriers in India have to pay out much more than the ones in other countries.