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SpiceJet grows revenues but rupee depreciation and high fuel prices impact results

CHENNAI, February 14, 2014: SpiceJet’s passenger traffic grew by 10% and revenues by 14% during the quarter ended December 31, 2013 as compared to quarter ended December 31, 2012. Despite such growth, there were constraints on the industry’s ability to increase yields sufficiently to neutralize the impact of cost increases, which were mostly led by a weaker INR. The approximate impact of currency depreciation alone, despite a hedging program that SpiceJet has in place, was around Rs 63 crore during the quarter ended Dec 31, 2013.

ATF prices were 9% more expensive per liter than comparable numbers for the same period last year, as the currency effect has been fully passed on to the local carriers by the public sector oil marketing companies. Overall, fuel costs constituted 52% of the total revenue in the current quarter as compared to 45% in the comparable quarter for the previous year. Similarly, several other costs that are denominated in US dollars, such as lease rentals, maintenance, spares etc, went up sharply as a result of the adverse FX rate.

Cost per Available Seat Kilometer (CASK) saw an increase of 10% to Rs3.9 in the quarter, compared to Rs3.5 in the same quarter last year.

The average passenger yields in current quarter grew by 3% to Rs.4,551 as against Rs 4,412 last year, which was not sufficient to fully offset cost increases. Unfortunately, the Company was unable to effect stronger yield increases since demand for air travel softened during the year, exacerbated by more seats on offer due to the planned addition of additional aircraft by the industry, including SpiceJet. Load factor accordingly decreased during the quarter to 70.5% from 75.0% during the same period last year, contributing to overall Revenue per Available Seat Kilometer (RASK) decline of 6% from Rs3.8 last year to Rs3.6 this year.

As a result of the factors mentioned, SpiceJet posted a loss of Rs.173 crores for the quarter ended December 31, 2013 compared with a profit of Rs.102 crores for the comparable period last fiscal.

SpiceJet’s operational performance improved significantly during the quarter with fewer cancellations and strong on-time performance in December 2013. SpiceJet was #1 in on-time performance as per official DGCA data. SpiceJet is currently in the process of implementing a complete network and schedule redesign, along with a productivity improvement and cost reduction program, while at the same time making necessary investments to improve its product and customer experience.

Highlights for the quarter ended December 31, 2013 vs. December 31, 2012
  • 10% growth in number of passengers.
  • 20% growth of Available Seat Kilometers.
  • 14% growth in number of departures
  • #1 in on-time performance in December, 2013 as per official DGCA data
  • 14% increase in Revenue from Operations.
  • 3% increase in passenger yields to Rs. 4,551 from Rs. 4,412
  • Net loss of Rs. 173 crores for the quarter compared to a profit of Rs. 102 crores for the corresponding quarter of previous year
About SpiceJet:
SpiceJet is India’s second largest low fare airline with approximately 20% share of the Indian domestic market. The airline currently operates more than 350 daily flights to 52 destinations, which includes 42 Indian cities and 10 international destinations.

SpiceJet connects it’s network using an advanced fleet of 42 Boeing 737-800/ 900ER Next Generation aircrafts, along with 15 Bombardier Q-400 aircrafts that are more focused on enhancing connectivity to Tier II and Tier III cities. The average age of SpiceJet’s aircraft is 4 years, one of the youngest fleets in the world.

Certain statements in this release concerning our future growth prospects are forward-looking statements, which involve a number of risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding fluctuations in earnings, fluctuations in foreign exchange rates, our ability to manage growth, intense competition in aviation sector including those factors which may affect our cost advantage, wage fluctuations, our ability to attract and retain highly skilled professionals, time and cost overruns on various parameters, our ability to manage international operations, reduced demand for air travel, liability for damages, withdrawal or expiration of governmental fiscal incentives, political instability, legal restrictions on raising capital or general economic conditions affecting our industry.

The words "anticipate", "believe", "estimate", "expect", "intend" and similar expressions, as they relate to us, are intended to identify certain of such forward-looking statements. The Company may, from time to time, make additional written and oral forward-looking statements, including statements contained in our reports to shareholders. The Company does not undertake to update any forward-looking statements that may be made from time to time by or on behalf of the Company unless it is required by law.