SpiceJet, controlled by media baron Kalanithi Maran, posted a net loss ofRs.173 crore in the three months to December, against a net profit of Rs.103 crore in the year-ago quarter.
SpiceJet said its traffic grew 10% and revenue by 14%. That was countered by a 9% increase in fuel expenses.
“Despite such growth, there were constraints on the industry’s ability to increase yields sufficiently to neutralize the impact of cost increases, which were mostly led by a weaker rupee,” the firm said in a statement after a board meeting in Chennai.
Average passenger yields in the quarter rose 3% to Rs.4,551 from Rs.4,412 a year earlier, which was not sufficient to fully offset cost increases, the firm said.
Revenue climbed to Rs.1,807.73 crore from Rs.1,585.87 crore in the same period a year ago.
Consulting firm Centre for Aviation (Capa) had estimated that SpiceJet would report a loss of between Rs.175 crore and Rs.215 crore while brokerage firm ICICI Securities Ltd had estimated a loss to the tune of Rs.260.4 crore, ‘Mint’ reported on 16 January.
SpiceJet is expected to report a record full-year loss in 2013-14, which could be equivalent to its combined losses since 2007 which stand atRs.1,186 crore, Capa said.
India’s airlines have been hurt by high prices of aviation fuel, which makes up half their operating cost, while the rupee’s 11% fall against the dollar last year added to their dollar-denominated costs.
Jet Airways (India) Ltd announced a loss of Rs.268 crore for the December quarter.
SpiceJet’s previous biggest December quarter loss was Rs.17.96 crore in 2008-09 in the aftermath of the US financial crisis that peaked with the collapse of Lehman Brothers Holdings Inc. in September 2008.
For airlines to make losses in the fiscal third quarter, which is traditionally the best quarter of the year for them because of festive and year-end holidays, is not a good sign, according to Capa.
“The financial performance of Indian domestic carriers has historically been characterized by particularly weak second and fourth quarters as traffic softens and fares are discounted aggressively,” Capa said in a 14 January report.
“Full-year profitability requires carriers to recoup these losses in the first and third quarters. But when the industry is reporting significant losses in peak season, it is clear the domestic Indian aviation market has a fundamental problem with viability,” it said.
SpiceJet shares dropped 1.64% to Rs.14.95 on BSE even as the benchmark Sensex rose 0.86% at 20,366.82 points.