Low-fare offers help SpiceJet limit Q2 loss to Rs310 crore
15 November 2014
Kalanithi Maran-promoted no-frill carrier SpiceJet Ltd has reported a net loss of Rs310 crore ($50.2 million) in the July-September 2014-15 quarter against the Rs560 crore loss reported in the comparable quarter of the previous year as its low fare offers helped fill more seats.
SpiceJet, which has been incurring losses for five consecutive quarters now, has discounted ticket prices to woo more passengers even as it reduced the size of its fleet in the last few months, amidst fierce competition in a country where all but one of India's main carriers are losing money.
The low-fare offers have helped the Gurgaon-based airline to increase the amount of revenue earned per available seat kilometre by 12 per cent during the quarter, and reduced costs by 7 per cent, although at the cost of profitability. The airline also recorded a 19 per cent increase in its load factor.
SpiceJet's revenue increased by 15 per cent to Rs1,449.94 crore during the September quarter while its expenses were down by 2 per cent at Rs1,749 crore.
''There were Rs75 crore of one-off and restructuring expenses in the quarter. Excluding these expenses, Year-on-Year loss (YoY) reduced by 57 per cent or Rs313.9 crore, EBITDAR margin improved from (-)19 per cent to 4 per cent YoY or an improvement of Rs283.6 crore,'' SpiceJet said in a statement.
''The revenue results above clearly indicate that our market stimulation efforts are driving not just higher loads, but higher unit revenue (RASK) as well; additionally our continued focus on ancillary revenues are showing substantial results with an increase 31 per cent YoY,'' SpiceJet added.
SpiceJet has rolled out several discounts in the past three quarters, which have often lead to price war of sorts with other airlines following up with discounts. The airline has offered as much as 22 discounts since the beginning of the calendar year.
"Management believes that there is still further significant potential on both improving revenues. The improved performance further demonstrates that the turnaround effort, which is still work-in-progress, has gained momentum during the quarter," SpiceJet stated in its release.