SpiceJet jumps 12% intraday, ends 6% up as airline turns profitable after 6 quarters

NEW DELHI: Shares of SpiceJet closed the day at Rs 20.15; up 6.61%. The stock jumped over 12 per cent in intraday trade a day after the airline clocked quarterly profit for the first time in six quarters.

The scrip hit an intraday high of Rs 21.30 and a low of Rs 19.90 on the BSE. Volumes on the counter jumped 1.37 times the daily average for the last two weeks.

Lower cost of operations on the back of curtailment of schedule and renegotiation of contracts and settlements turned SpiceJet profitable.

The airline had shut operations for a day last month due to financial problems in December last year.

The airline announced a net profit of Rs 22.5 crore for the fourth quarter ending March 31, 2014 as compared to a loss of Rs 321.5 crore during the same quarter last year. The airline also reduced losses during the FY15 fiscal to Rs 687.05 crore from Rs 1003.24 crore during FY14.

“The profits include the benefit of renegotiated contracts and settlements, the provisioning for re-delivery expenses, and a net gain on an insurance claim,” said a release from the airline.

The company, which changed hands during the quarter and is now under Chairman and Managing Director Ajay Singh, has received about Rs 650 crore since the new promoters took over. It has also cleared Rs 400 crore liabilities and Rs 200 crore of bank loans since the time new promoters took over, said SpiceJet's CFO Kiran Koteshwar to ET.

SpiceJet, which continuously reduced capacity due to financial crisis, operated with 47 per cent reduced capacity during the fourth quarter compared to same quarter last year. This reduction in capacity led to revenues falling by about 50 per cent during the quarter under review. All these factors led to expenses during the quarter falling to Rs 888. 82 crore from Rs 1907.82 crore.

While the airline believes that they can carry forward this momentum in the quarters ahead due to growing passenger aviation market in the country, analysts believe that a positive fourth quarter will help the airline in raising funds, ET reported.

“Results are a surprise. Lot more needs to be done to emerge as a consistently profitable airline, though efforts and focus are visible. Positive Q4 results will, no doubt, assist in fund raising, including debt,” said Kapil Kaul, CEO of Centre for Asia Pacific Aviation in India.