After posting significant losses for three quarters, SpiceJet on Friday announced it had made a consolidated net profit of Rs 110.1 crore, up nearly 160 per cent year-on-year (YoY), in the third quarter of 2022-23 as “air travel has come roaring back”.
The financially troubled airline also stated that it is in talks with banks to raise an additional Rs 763.9-crore loan under the central government's Emergency Credit Line Guarantee Scheme (ECLGS). In Q3 and Q2 of 2022-23, the airline took bank loans of Rs 150.9 crore and Rs 60 crore, respectively, under the ECLGS. In the current quarter, it is receiving a Rs 128.6-crore loan from banks under this scheme.
“Despite a big jump in passenger traffic (in Q3), business continued to be impacted by high fuel prices and the depreciating rupee,” the airline's statement noted. In the January-September period last year, the carrier incurred a total net loss of Rs 2,101.8 crore. It had last posted a consolidated net profit in Q3FY22, of Rs 42.4 crore.
SpiceJet said it has not been operating various aircraft due to technical reasons and despite its inability to undertake revenue operations, it continued to incur various costs with respect to these planes. According to its website, the airline has a fleet of 91 planes.
“During Q3FY22, the holding company (airline) agreed to return certain such aircraft and negotiated the waiver of some of the past dues of lease rentals and maintenance reserve amounting to Rs 3,081.05 crore. Impact of the same is appropriately recorded under the head other income and finance costs, as appropriate, in the quarter and nine months ended 31 December 2022," it mentioned.
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Ajay Singh, chairman and managing director of SpiceJet, said: “We exceeded our operational targets and continued with our unmatched performance clocking the highest load factor for every single month in 2022… Air travel has come roaring back touching newer heights.” The profits have been driven by strong performance in passenger and cargo businesses, he mentioned.
Mitul Shah, head of research at Reliance Securities, called SpiceJet’s Q3FY23 performance decent. He noted the airline’s higher non-operating income boosted its bottom line. “Its non-operating income grew 239 per cent (quarter-on-quarter) and 23 per cent (YoY) due to compensation of Rs 310 crore on account of settlement with aircraft manufacturer Boeing on grounded Max aircrafts during the past period,” Shah noted.
The airline said its board is considering raising fresh capital through the issuance of eligible securities to qualified institutional buyers, in accordance with applicable law.
"Based on the foregoing and their effect on business plans and cash flow projections, the management is of the view that the (airline) group will be able to achieve profitable operations and raise funds as necessary in order to meet its liabilities as they fall due," it mentioned.
These conditions indicate the existence of uncertainty that may create doubt about the airline’s ability to continue as a going concern. SpiceJet said: "Based on the factors mentioned in this note, including renegotiation of payment terms to various parties and raising of additional funds, the management is of the view that the going concern basis of accounting is appropriate."
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