Lower costs, sharp rise in other income boosts SpiceJet Q1 profit

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₹205 crore compared to ₹17 crore for the March quarter, results for which were also announced on Monday. However, a reduction in fleet size caused a decline in operating revenues both year-on-year and sequentially. “Passenger volume, too, has reduced by 31% year-on-year, which took a toll on total revenues.

This was offset by strong yields," said Gagan Dixit, analyst at Elara Securities. Last quarter, the industry saw strength in passenger yields (a measure of pricing) driven by Go Air’s woes and SpiceJet, too, benefited from this trend. To be sure, two factors aided SpiceJet’s profitability in Q1.

Firstly, costs were lower. In fact, aviation turbine fuel costs as a percentage of operating revenues fell drastically to 38.2% last quarter from 59% in the June 2022 quarter and 49% in the March quarter. Fuel costs generally account of a large proportion of operating costs of aviation companies.

Aircraft charges and aircraft maintenance charges also fell, boosting the airline’s absolute operating profit performance. Overall, SpiceJet was able to report an Ebitdar (earnings before interest, tax, depreciation, amortization, and lease rentals) of ₹388 crore versus a loss of ₹357 during the same period last year. Ebitdar is a key measure of profitability for airlines.

What also provided a fillip to SpiceJet’s pre-tax earnings is the significant year-on-year jump in other income to ₹266 crore from ₹21.6 crore in the same period last year. Still, on a per unit basis, the scenario is not hunky dory. As Dixit points out, “On a per unit basis, SpiceJet’s non-fuel costs have risen by 32% year-on-year as fleet size has reduced." Meanwhile, to strengthen the company’s financial position, the promoter/promoter group is set to infuse ₹500