India’s second largest airline SpiceJet has reported a financial loss in the first quarter of its 2022 fiscal year, despite a strong showing from the cargo and logistics department, citing the second wave of the pandemic and the global effect on air travel as main reasons for the decline.
The airline says in a statement that it suffered a loss of 7,291 million Indian rupees (US$98 million) for the quarter ending in June, marking an increase of 23% as compared to the loss of 5,934 million Indian rupees in the same period last financial year. India’s fiscal year runs from 1 April to 31 March the following year, hence this year’s April to June marks the first quarter of a new fiscal term.
The statement says that following last year’s lockdown by the Indian government due to the pandemic, all passenger services were stopped and these regulatory restrictions impacted the airline’s operations, causing financial implications.
As the situation improves after the lockdown, a second wave of COVID-19 hit the country in March this year, leading to a significant drop in air travel demand and more restrictions on the airline’s domestic operations, it says.
While the airline suffered from an overall financial loss in the fiscal first quarter, total income reported positive results, with an amount of 12,660 million Indian rupees, as compared to 7,046 million Indian rupees (US$94 million) in the first quarter of last fiscal year, the statement shows.
The dip in passenger travel was compensated partly by increased demand for the cargo and logistics platform SpiceXpress, reaching revenue of 4,730 million Indian rupees in the quarter as compared to last fiscal year’s same quarter revenue of 1,660 million Indian rupees (US$22 million). This netted a profit of 300 million Indian rupees, an increase of 285%. The quarter also had more than 43,000 tonnes of cargo delivered, it says.
During the lockdown period, where the passenger business was suspended or in low demand, the airline further enhanced its cargo operations using a dedicated fleet of freighter aircraft and passenger converted aircraft, the statement adds.
SpiceJet’s chairman and managing director, Ajay Singh, says that the last five quarters have been the most difficult phase for the airline, but with vaccination numbers picking up and demand for air travel increasing steadily, he is confident that SpiceJet will recover lost ground quickly.
“We are in the process of hiving off our logistics platform, SpiceXpress, which will unlock significant value for SpiceJet and its shareholders. This will also allow SpiceXpress to raise capital to fuel its rapid growth,” he adds.
SpiceJet launched 74 new flights during the quarter and currently has a fleet of 118 aircraft according to information online, including Airbus A320, A330, Boeing 737 and De Havilland Canada Dash 8-400 models.
The statement says SpiceJets continues to incur various costs owing to the grounding and inability of Boeing 737 Max aircraft to undertake revenue operations over the last two years. The airline is engaging Boeing to recover damages.
Aircraft manufacturer De Havilland Canada previously went to court against SpiceJet for failing to make pre-delivery payments for its 25 Dash 8-400 aircraft order, and was ruled by the UK court that they are entitled to seek US$43 million in damages from the contract dispute.
Addressing the Q400s aircraft manufacturer’s claims, the press statement says that while the summary judgement is in favor of the manufacturer, the airline is pending for adjudication before the court of appeal. On July 21 this year, the court also directed the airline to deposit five million pounds (US$6.9 million) before the court of appeal within 28 days.