Companies

SpiceJet reports net loss of ₹807 cr in Q4FY20

Our Bureau New Delhi | Updated on July 29, 2020 Published on July 29, 2020

The company continues to incur various costs for the grounded Boeing 737 MAX aircraft

Airline suffers net loss of ₹934.8 cr in FY2020

SpiceJet reported a net loss of ₹807.1 crore in the fourth quarter of FY20 (including a non‐cash loss of ₹473.4 crore due to forex losses on restatement of lease liability due to Ind AS 116) against a profit of ₹56.3 crore in the same quarter of the previous year, the airline has said in a statement to BSE.

It said business was adversely impacted due to the Covid‐19 pandemic and the nation‐wide lockdown that resulted in the suspension of flight operations. The airline reported a net loss of ₹934.8 crore in FY2020 (including a non‐cash loss of ₹697.0 crore due to forex losses on restatement of lease liability due to Ind AS 116).

SpiceJet’s operating revenues were at ₹2,863.9 crore for the reporting quarter and at ₹12,358.6 crore for FY20. On an EBITDA (Earnings before interest, taxes, depreciation and amortisation) basis, the loss was ₹223.6 crore for the forth quarter with a profit of ₹1,273.9 crore for FY20. On an EBITDAR (EBITDA and restructuring or rent costs) basis, the loss was ₹90.9 crore for the reporting quarter and a profit of ₹1,636.8 crore for FY20.

The statement added that the airline is actively using Ras Al Khaimah airport (UAE)as a hub for cargo operations.

The likely return to service of the Boeing 737 MAX in the first quarter of calendar year 2021 will be a big boost as it will add operationally efficient aircraft to SpiceJet’s fleet.

Boeing 737 MAX

The company continues to incur various costs for the grounded Boeing 737 MAX aircraft, and during the quarter ended March 31, 2020, it recognised ₹134.5 crore towards aircraft and supplemental lease rentals and other identified expenses, as other income for the reporting quarter. This is part recognition of the total reimbursements on which the company is working with the aircraft manufacturer for various ascertained costs and losses incurred by it on this aircraft.

Meanwhile, in its report on the audit of SpiceJet’s standalone financial results, SR Batliboi & Associates has drawn attention to the recognition of other income of ₹671.80 crore for the year ended March 31, 2020 (including ₹134.53 crore for the quarter ended March 31, 2020) and the related foreign exchange gain on restatement of these balances for the quarter and year ended March 31, 2020, amounting to ₹36.70 crore and ₹42.73 crore, respectively.

“In our view, there is no virtual certainty to recognise such other income and related receivable, as required by paragraph 33 of Ind-AS 37, ‘Provisions, Contingent Liabilities and Contingent Assets’.”

Had the company not recognised such other income (including its related foreign exchange restatement), the reported loss for the quarter and year ended March 31, 2020 would have been ₹987.48 crore and ₹ 1651.10 crore, respectively, and accumulated losses as at March 31, 2020 ,would have been higher at ₹714.53 crore.

“Our conclusion for the quarter ended December 31, 2019 was also modified in respect of this matter,” the chartered accountants said in their audit of the accounts.

Material uncertainty

The auditors have also raised concerns about the material uncertainty related to going concern in the standalone Ind AS financial statements which indicate “that the company has accumulated losses and its net worth has been fully eroded. The company has incurred a net loss during the current and previous year, and the company’s current liabilities exceeded its current assets as at the balance sheet date. These conditions, along with other matters, indicate the existence of a material uncertainty that may cast significant doubt about the company’s ability to continue as a going concern,” the auditor’s report said.

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Published on July 29, 2020
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