SpiceJet To Raise Rs. 2,500 Crore Through QIP As Net Loss Widens

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Ajay Singh’s SpiceJet has posted a net loss of Rs. 235 Crore in the fourth quarter of financial year 2020-21.

The airline, similar to other carriers in Indian aviation, has been hit hard due to the stringent travel restrictions imposed in view of the COVID-19 crisis.

The loss incurred by SpiceJet in Q4 of last fiscal has gone up, compared to the quarter ended on December 31, 2020. The airline had posted a net loss of Rs. 57 crore in Q3.

Notably, the loss in Q4 of FY21, at Rs. 235 crore, is lower than what the airline had incurred in the same quarter of FY20. It had then posted a net loss of Rs. 807 crore.

SpiceJet Quarter ending March 2021

  • Registers industry’s highest domestic load factor of 77.3%
  • Passenger revenue grows by 15% as compared to Q3
  • Sustained market leadership in passenger RASK amongst listed Indian peers
  • Significant revenue generated through charter business

SpiceJet also announced that it would be raising fresh capital of Rs. 2,500 crore. The airline’s board has approved a proposal to raise the amount through the issue of eligible securities to qualified institutional buyers.

SpiceJet is also currently in discussion with banks and financial institutions to raise additional funds. The management of the carrier believes it will be able to achieve profitable operations in the future.

SpiceJet has entered into negotiations with lenders regarding deferment of dues and other waivers. According to the carrier, the uncertainty in revenue operation in the short-term is expected to normalise in the long-run.

The company has deferred payments to various parties, including vendors, along with its dues to statutory authorities.

Key highlights for the quarter – Cargo

  • Revenue of Rs. 416.5 Crore for the quarter ending March 2021 against Rs. 67.8 Crore in corresponding previous quarter ending March 2020
  • Net profit of Rs. 40.2 Crore for the quarter ending March 2021 against loss of Rs. 59.6 Crore for the corresponding previous quarter
  • EBITDA profit of Rs. 66.5 Crore for the quarter ending March 2021 against a loss of Rs. 37.5 Crore for the corresponding previous quarter
  • Carried 39,693  ton of cargo in Q4
  • Transports 133 ton of COVID vaccine between January –  June, 2021
  • Emerges as the most preferred airline for transportation of COVID‐19 vaccine; transported 50.5 million COVID‐19 vaccine doses till date

In a statement the airline said that while there has been significant losses suffered on the passenger side of business the dedicated cargo operations continued to provide much required lifeline to its over-all operations.

On a segment basis the revenue from cargo operations increased by 518% aggregating to Rs. 1,117.5 Crore for FY2021 with profit of Rs. 130.9 Crore for the full year against a loss of Rs. 134.2 Crore for the previous year.

“FY2021 posed multiple unprecedented challenges as we saw most parts of the world going into lockdown. With the second wave of the pandemic and the emergence of various mutant variants, the Company continues to see significant negative impact to demand for air travel,” it said.

The statement added that 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.

Key highlights for the year – Passenger

  • Reports a net loss of Rs. 998.3 Crore in FY2021;
  • Operated more than 1,675 charter flights to repatriate over 3 lakh passengers
  • Added Ras-Al-Khaimah as its latest  international destination
  • Added Darbhanga & Nashik under UDAN
  • Registers domestic load factor of 75.7% for the fiscal
  • Operated multiple charter flights on Airbus 330, Airbus 340, Boeing 777 and Airbus 321
  • During this pandemic, SpiceJet operated charter flights to various countries including UAE, Saudi Arabia, Oman, Qatar, Kuwait, Kabul, South Korea, Philippines, Kyrgyzstan, Kazakhstan, Russia, Netherlands, Lebanon, Georgia, Hong Kong, Bangladesh, Maldives, Uzbekistan, Turkmenistan, Malaysia and Sri Lanka
  • SpiceJet has also operated long-haul flights to and from London, Amsterdam, Toronto, Rome and Milan helping Indian and foreign nationals get back to their homes
  • First airline to offer the ‘COVID-19 Insurance product’ for its customers in partnership with Digit Insurance
  • SpiceJet was the first to offer the ‘private row online booking option’ for its customers to help them with social distancing at 35,000 feet
  • Introduced the ‘Zero Cancellation’ product in partnership Liberty General Insurance for its customers
  • Honoured with ‘Four Star Low Cost Carrier 2021’ by APEX – The Airline Passenger Experience Association

The Company continues 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.

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SpiceJet promoter Ajay Singh

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 Rs. 2,500 Crore. These funds will be used to significantly strengthen our balance sheet.”

Mr. Singh explained that much like the first wave, this time too, their cargo arm was exceptionally active and has performed extremely well transporting record quantities of supplies all across the globe.

Separate Cargo Business

“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,” he said.

Mr. Singh informed that with vaccination touching record numbers and travel demand slowly picking up, he hoped 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,” he said.

In terms of operational parameters, SpiceJet said it 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%.

 

 

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