Low-cost airline SpiceJet on Wednesday, August 31 declared losses of INR 1,725 crore for the full year of FY 22. The airline also reported a loss of INR 783.60 crore for April-June of FY 23 as compared with a loss of INR 729 crore in the year-ago period.
The airline had delayed results due to a ransomware attack the company faced in April. The company’s freighter division however registered a profit of INR 18 crore for the first quarter of FY 23.
SpiceJet also said that Chief Financial Officer Sanjeev Taneja has resigned and the company will be appointing a replacement in September.
Shares of SpiceJet fell as much as 14.7% on Thursday, September 1 after the low-cost carrier posted a bigger loss due to high fuel costs and unfavourable foreign currency rates, and said its chief financial officer had resigned.
The cash-strapped airline, which announced delayed salary payments to employees, has also passed a board resolution to appoint bankers to raise capital of USD 200 million (INR 1,591 crore).
“We are optimistic about our future and our continued recovery and to achieve our future plans the Board has mandated fresh capital issuance and the Company will be shortly engaging with investment bankers for a potential raise of up to the USD 200 million.”
At the end of FY 22, the company had cash and cash equivalents of INR 9.6 crore and bank balances of INR 50.72 crore.
Total revenue for the quarter under review came at INR 2,478 crore, as against INR 1,266 crore in the same quarter of the previous year, SpiceJet said in a regulatory filing.
For the same comparative period, operating expenses stood at INR 3,267 crore as against INR 1,995 crore. On an EBITDA basis, the loss was at INR 379 crore for the reported quarter as against a loss of INR 244 crore for the quarter that ended June FY2022.
The auditors of the company have raised material uncertainty about the company’s ability to continue as a going concern but the company’s management has said that the company has levers through raising capital and fresh loans from lenders.
With the increase in passenger operation and yields, the company’s revenue has increased. The company is in further discussions with banks to raise additional funds under ECLGS 3.0 extension scheme and such discussions are in an advanced stage.
The Board of Directors has also approved the raising of fresh capital through the issue of eligible securities by applicable law. Based on the foregoing and its effect on business plans and cash flow projections, the management is of the view that the Company will be able to achieve positive cash flow from operations and raise funds as necessary, to meet its liabilities.
“Record high ATF prices and depreciating Rupee were the major contributors. Despite the complex operating environment and highest ever input costs, SpiceJet has been able to sustain its operations with the confidence shown by our partners and passengers. Last year was a period of restructuring and settlements and we successfully completed and implemented settlements with most of our major partners.
As we move ahead we are encouraged with the strong travel demand and our focus for the next year would be to induct more fuel efficient Boeing 737-8 MAX aircraft and concentrate on our regional and international routes.”Ajay Singh, Promoter and CMD, SpiceJet
The airline further stated that its business was severely impacted by record high fuel prices and a depreciating rupee and discounting the forex loss, the company would have reported a much-reduced loss of INR 420 crore in Q1 FY 23.
Singh said that the company will be inducting fresh capacity enhancement in both passenger and freighter business.
Even as forecasts for India’s aviation sector look brighter with local traffic surging 94% in July, SpiceJet, which has slipped from No 2 to No 5 in the rankings, may find it difficult to make a comeback. Jet Airways is planning to resume flying by September and Air India is headed for a revamp under Tata Sons’ management.
SpiceJet faces several challenges. India’s aviation regulator has capped the number of seats the carrier can sell at 50% for eight weeks after it reported a string of mid-air malfunctions. The regulator has said the airline failed to build “safe, efficient and reliable” air services and in July summoned it to explain the incidents.
SpiceJet incurred net losses of INR 316 crore, INR 934 crore, and INR 998 crore in FY19, FY20, and FY21, respectively. On August 23, Singh had said that the airline was exploring multiple options, including a stake sale to other airlines, to raise to INR 2,000 crore.
2 more aircraft deregistered
Aviation regulator DGCA on Wednesday, August 31 deregistered two more Boeing 737 planes of SpiceJet following non-payment of dues to lessors. With the latest deregistration, a total of six Boeing 737 aircraft of the budget carrier have been deregistered in August.
Boeing 737-800 aircraft VT-SPU and Boeing 737-900ER aircraft VT-SGQ have been deregistered under IDERA on August 31, according to a senior official at the Directorate General of Civil Aviation (DGCA).
Under the Cape Town Convention, lessors and lenders can seek deregistration of a leased aircraft in case there is a default. Such requests are done under Irrevocable De-registration and Export Request Authorisation (IDERA).
In recent months, SpiceJet has been facing turbulent times, including financial headwinds. The pilots and flight crew members have often flagged stress issues due to financial irregularities.
SpiceJet delays salaries again
Meanwhile, SpiceJet employees alleged delay in the disbursal of salaries for the second straight month, with the budget airline saying the payments were being made in a “graded format”.
There was a delay in disbursal of salary for staff, including flight crew, for July and many are yet to get Form 16 for the financial year 2021-22 as well, SpiceJet employees claimed.
“The salary disbursal was timely for June. Also, the salaries are yet to match the pre-COVID-19 levels. The salaries being disbursed to captains and first officers are not even 50% of what they used to be before the pandemic outbreak in March 2020,” a staff told news agency PTI.
However, SpiceJet claimed it has started salary disbursal in a “graded format”. “We have started crediting salaries from today. Like the previous month, salary will be credited in a graded format,” the airline said in a statement.