SpiceJet stock tanks 4% as Q2 loss widens to ₹837.8 cr

Shares of low-cost carrier SpiceJet tanked as much as 4% on Tuesday after the airline's net loss widened to ₹837.8 crore for the quarter ended September 30, 2022.

The budget carrier's stock declined 4% in the opening trade to ₹37.20 on the BSE.

SpiceJet reported a net loss of ₹837.8 crore for the second quarter as compared to a net loss of ₹561.7 crore in the corresponding quarter last year as business was hit by record high fuel prices, a depreciating rupee in the traditionally weak quarter, the airline says in a stock exchange filing.

Total revenue in Q2 stood at ₹2,104.7 crore as against ₹1,538.7 crore in the same quarter of the previous year. For the same comparative period, operating expenses were ₹2,942.6 crore as against ₹2,100.4 crore.

The Directorate General of Civil Aviation (DGCA) had earlier introduced flight restrictions on SpiceJet, restricting the number of departures to 50% of the departures approved under summer schedule 2022. The aviation regulator had kept the budget carrier under "enhanced surveillance" till October 29, 2022.

Adding to its woes, aviation turbine fuel (ATF) prices soared 87% year-on-year during the second quarter. Jet fuel constitutes around 40% of the running cost of an airline.

"The high ATF prices and depreciating rupee continue to be a downer for the industry but the overall outlook for the sector remains positive," says Ajay Singh, chairman and managing director, SpiceJet. "A near to normal business environment and an upturn in business and leisure travel coupled with government aid are giving hope to positivity," he adds.

"Having completed a series of settlements with most of our major partners and the upcoming hive‐off of our cargo and logistics arm, we expect significant improvements in our operating environment and are well placed to script a new phase of accelerated growth and meet the resurgent demand from passenger and cargo customers," says Singh.

The sector has been witness to prolonged challenges, however, the recent enhancement in the Emergency Credit Line Guarantee Scheme (ECLGS) limit to ₹1,500 crore by the government will go a long way in providing the much needed stability to the sector, the SpiceJet chairman says. The finance ministry last month enhanced the credit limit to airlines under the ECLGS scheme, making them eligible for 100% of their fund-based or non-fund-based loan outstanding debt, up to ₹1,500 crore.

In terms of operational parameters, SpiceJet says it had the highest passenger load factor amongst all airlines in the country. The average domestic load factor was 85% for the quarter. The airline launched 12 new routes and operated 215 charter flights in the quarter. However, the cash strapped carrier's market share fell from 7.9% in August to 7.3% in September.