SpiceJet has reported a net loss of ₹593.4 crore for the quarter ended June 2020, against a net profit of ₹261.7 crore in the previous-year period. In a statement to the BSE, the airline said it posted losses as flight operations remained suspended for most part of the quarter following the nationwide lockdown.

Incidentally, the only other listed airline in India, IndiGo, had also reported a first quarter net loss of ₹2,844.3 crore — its first loss since listing.

In the notes to the results statement, SpiceJet said: “The losses for the year ended March 31, 2019 and March 31, 2020 have been primarily driven by adverse foreign exchange rates, fuel prices, pricing pressures and the early impact of Covid-19 in the period February-March 2020 whose effects have continued to impact on the results of the current quarter ended June 30, 2020.”

Cost reduction

The airline reported an EBIDTAR of ₹13.5 crore for Q1. It said it had launched an aggressive cost reduction plan which included restructuring of aircraft leases and early return of aircraft, which would have a long-term saving impact on costs. In Q1, while revenue from cargo increased 144 per cent, revenue from operations fell 83 per cent due to the pandemic.

The airline’s operating revenue was ₹514.7 crore (₹3,002.1 crore) while operating expenses were ₹1,303.2 crore (₹2,887.2 crore). On an EBITDAR basis, the profit in Q1 FY21 was ₹13.5 crore (₹812.1 crore).

Ajay Singh, Chairman and Managing Director, SpiceJet, expressed confidence that “as more and more States ease travel restrictions and business activity gets back to normal there will be a significant improvement in the operating environment for airlines”. “We are witnessing some early encouraging signs towards recovery. I expect our cargo business to continue to expand in the coming quarters. I am also encouraged by the progress made in the re‐entry of Boeing’s MAX aircraft into service,” he said.

Auditors’ concerns

SR Batliboi & Associates, in its independent auditors’ report for the results, raised concerns about certain income which the airline has shown as other incomes from Boeing towards compensation for grounding of the MAX aircraft.

“In our view, there is no virtual certainty to recognise such other income and related receivable, as required by Ind-AS 37, Provisions, Contingent Liabilities and Contingent Assets. Had the group not recognised such other income (including its related foreign exchange restatement), the reported loss for the quarter would have been higher by ₹141.34 crore and accumulated losses as at June 30, 2020 would have been higher accordingly. Our opinion for the year and quarter ended March 31, 2020 and conclusion for the quarter ended June 30, 2019 were also qualified in respect of this matter,” the auditors said in their report.

“Such conditions, along with other matters set out in that note, indicate the existence of a material uncertainty that may cast significant doubt about the company’s ability to continue as a going concern,” they added.

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