Indian budget carrier SpiceJet saw a 33% year-on-year uptick in operational profit during the third quarter following the expansion of its fleet and addition of new routes in 2019.
Operating profit rose to Rs732 million ($10 million) during the third quarter ending in December, up from Rs550 million for the same period in 2018. Operating revenue rose 47% year-on-year to Rs36.5 billion.
Increased revenue was partially offset by a 52% year-on-year rise in expenses from Rs25 billion during the third quarter of 2018 to Rs38 billion in 2019. Unfavorable foreign exchange rates and increased maintenance costs contributed to rising expenses. Cost per available seat kilometer (CASKM) rose by 2% year-on-year, while revenue per available seat kilometer (RASKM) shrank by 2%.
Capacity, in ASKs, grew by 59% year-on-year during the third quarter as SpiceJet ended the year with 119 aircraft. The carrier’s growth plans were stunted, however, with 13 Boeing 737 Max jets remaining in storage since March due to the worldwide grounding of the aircraft.
The absence of Max aircraft from the airline’s schedules is an “unprecedented crisis”, SpiceJet chairman Ajay Singh states in the earnings release. SpiceJet has 155 firm orders of 737 Max jets, having signed letter of intents for an additional 50 Max aircraft, Cirium fleets data shows.
“We were expecting the Max to return to service by January 2020 but that hasn’t happened,” Singh says. “The continued grounding and the delay in its return to service has undoubtedly hit our growth plans adversely and resulted in inefficient operations and increased costs. That said, SpiceJet, expects to grow profitably while maintaining a tight control over costs.”
The carrier is studying an offer from Boeing to compensate the carrier for the grounding of Max jets, which could be in the form of cash or other assets or services.
During the third quarter, the airline added 65 new domestic flights, increasing connectivity between hubs and regional destinations within India. It became the first carrier to launch a nonstop flight between Ahmedabad and Aurangabad; Pune and Jodhpur; and Chennai and Durgapur.
SpiceJet’s steps to strengthen its network during the third quarter also included signing a codeshare agreement with Emirates Airline and a memorandum of understanding with Gulf Air for interline and codeshare agreements. These will open SpiceJet’s network to fly directly to Bahrain for the first time and will increase options for flights through Dubai.