SpiceJet Q2 losses narrow on cargo revenue growth

A steady increase in cargo revenue has helped Indian low-cost carrier SpiceJet narrow its quarterly operating loss, even as passenger travel demand remains in the doldrums amid the coronavirus pandemic.

For the quarter ended September 30, the carrier reported an operating loss of Rs1.06bn ($14.2m), significantly lower than the Rs6bn loss it reported the previous quarter.

Year on year, the loss was also lower: during the same period last year, SpiceJet racked up an operating loss of Rs4.6bn.

Revenue for the period fell 62% year on year to Rs10.7bn, led mainly by a decline in passenger traffic revenue.

However, a surge in freight and logistics revenue helped offset the revenue decrease. Year on year, SpiceJet saw its cargo revenue increase more than five-fold to Rs2.3bn. Compared to the previous quarter, it represented a 37% jump.

Expenses for the period dropped by around 60% year on year to Rs14.2bn. SpiceJet adds that the ongoing Boeing 737 Max grounding has led to costs of around Rs1.4bn for the quarter. 

The carrier reported a net loss of Rs1.06bn, which was an improvement from the Rs4.6bn net loss it reported last year.

SpiceJet chairman and managing director Ajay Singh said the carrier will continue to expand its cargo business, tapping into burgeoning demand in the sector.

Since late March, SpiceJet has operated nearly 10,000 cargo flights, carrying 76,500 tonnes of freight. The carrier utilises a fleet of 17 aircraft to operate cargo flights, and has a cargo network of 63 domestic and 44 international points.

To help bring costs down, the carrier discloses that it is renegotiating lease contracts and is reassessing its maintenance provisions.

“The group has assessed its liquidity position for the next one year, is in negotiations with lenders regarding deferment of dues and other waivers, and also assessed the recoverability and carrying values of its assets,” SpiceJet said. 

It did not provide a forecast for the full financial impact of the coronavirus pandemic, citing high uncertainty in the operating environment.