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BW Businessworld

SpiceJet Reports Net Loss Of Rs 998 Cr for FY21

For Q4 (Jan-Mar 21), SpiceJet is able to reduce its Net Loss to Rs 235.3 crore from Rs 807 crore in Q4 FY20; Board approves fundraise of up to Rs 2,500 crore and a nod to hiving off its profitable cargo business.

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Low-cost airline SpiceJet and a leading air cargo operator, reported a net loss of Rs 235.3 crore in the fourth quarter of FY21 against a loss of Rs 807.1 crore in the same quarter of the previous year as the business continues to be severely impacted by the second wave of Covid-19 pandemic which has adversely hit operations and travel demand. For the full financial year 2020-21, SpiceJet reported a net loss of Rs 998.3 core.

The board of directors for SpiceJet also approved a fundraising plan of up to Rs 2500 crore and took the decision to hive off its Cargo business, which has generated a profit of Rs 130.9 crore for the full year.

For the Quarter ending March 2021, SpiceJet registered an industry’s highest domestic load factor of 77.3 per cent, the company said in an official statement. Compared to the third quarter (Oct-Dec 20), the passenger revenue clocked a 15 per cent growth, it added.

While there has been significant losses suffered on the passenger side of the business the dedicated cargo operations continued to provide a much-required lifeline to our overall operations. On a segment basis, the revenue from cargo operations increased by 518 per cent aggregating to Rs 1,117.5 crore for FY2021 with profit of Rs 130.9 crore for the full year against a loss of INR 134.2 crore for the previous year.

"FY20-21 posed multiple unprecedented challenges as we saw most parts of the world going into lockdown," the company said. With the second wave of the pandemic and the emergence of various mutant variants, the company continues to see a significant negative impact to demand for air travel. However, even as the company continues to monitor the impact of the pandemic on its operations and financial condition, it has also been implementing various mitigation strategies to protect its long-term sustainability, it said.

In the statement, SpiceJet said it continued to incur various costs owing to the grounding and the inability of Boeing 737 Max aircraft to undertake revenue operations for over two years now. SpiceJet continues to engage with Boeing to recover damages incurred by the Company due to the grounding of the MAX and also engage with aircraft lessor of the grounded MAX aircraft to restructure the present leases, it added.

Ajay Singh, Chairman and Managing Director, SpiceJet, said, “The intensity with which the second wave of Covid-19 struck and the unimaginable devastation it has caused, both for the already battered travel industry and generally, will take time to heal. To ensure our long-term growth and sustainable operation we have decided to raise funds of up to INR 2,500 Crore. These funds will be used to significantly strengthen our balance sheet.”

“Much like the first wave, this time too, our cargo arm was exceptionally active and has performed extremely well transporting record quantities of supplies all across the globe. In order to provide greater focus to cargo business and raise additional capital, we will hive off the cargo business to operate as a separate entity. The same will provide greater opportunity and flexibility in pursuing long-term growth plan and strategies for the cargo business.”

“With vaccination touching record numbers and travel demand slowly picking up, we hope that the worst is behind us, but we remain extremely cautious about the future. While there is still much work and recovery to be done, we have managed to reduce our net loss in Q4 through re-structuring of our contracts which will have a significant positive impact in the long term.”

In terms of operational parameters, SpiceJet had the best passenger load factor amongst all airlines in the country. The average domestic load factor for the quarter was 77.3% while for fiscal 2021 it was 75.7%.