India’s SpiceJet returned to profitability in its third-quarter earnings on the back of “significant improvement” in domestic travel demand.
The low-cost carrier also disclosed a significant sum it recieved from the settlement with Boeing over the 737 Max grounding, though airline auditors qualified their opinion on the way the settlement sum was calculated in the financial results.
For the three months to 31 December 2021, SpiceJet reported an operating profit of Rs1 billion ($13.4 million), reversing the Rs570 million loss it reported during the same period in 2020.
The carrier reported a net profit of Rs233 million, against the Rs570 million net loss in 2020.
Revenue during the quarter rose nearly 43% year on year to Rs26.8 billion, outpacing a 33% increase in costs to Rs25.8 billion.
Both passenger and cargo revenues rose during the quarter, as India eased domestic travel restrictions.
SpiceJet disclosed Rs4.2 billion in what it terms “other income”, which came from a settlement it made with Boeing over the grounding of the 737 Max. SpiceJet is the sole operator of the 737 Max and has 13 examples in its fleet.
India cleared the type to resume operations in August 2021, ending a two-year grounding.
In its latest financial results, SpiceJet says claims recoverable for the grounding amounted to Rs15.5 billion.
However, SpiceJet auditors Walker Chandiok & Co state that the airline “should have recognised such accommodations in its entirety during the quarter ended 31 December 2021 on completion of settlement”.
SpiceJet adds that the settlement was a “significant event”, which will allow it to bring the grounded jets back to operation, and “paves way for the induction” of newer 737 Max aircraft.
The narrowbody, of which SpiceJet has 155 on order, will be key in the airline’s “stronger comeback” in 2022.
It states: “The airline is now aiming for a stronger comeback in 2022 by utilising and expanding its 737 Max fleet for better yield and flying experience, launching new customer centric services, optimising daily operations based on IT and expanding network both domestically and internationally.”