SpiceJet lands at runway of loss in September

New Delhi: SpiceJet reported widening of net loss to Rs 462.58 crore in the September quarter as higher costs related to grounding of Boeing 737 MAX planes and changes in accounting norms bogged down the no-frills carrier.

With 13 MAX aircraft on the ground, the airline has initiated the process of seeking reimbursements and claims from Boeing and expressed hope about a “favourable outcome”. In a release, SpiceJet said the net loss of Rs 462.58 crore in the latest September quarter was mainly on account of inflated costs with respect to MAX grounding and a seasonally weak quarter.

The figure includes a “loss of Rs 180.3 crore on account of accounting standard Ind AS 116”. Indian Accounting Standard 116 or Ind AS-116 has come into force from April 1. It pertains to principles for recognition, presentation and disclosure of leases. Airlines mostly opt for sale and leaseback of planes. The company had a net loss of Rs 389.37 crore in 2018 September quarter. However, the airline’s total income jumped to Rs 3,073.50 crore in the second quarter of the current financial year from Rs 1,902.08 crore in the same period a year ago. Operating revenue rose to Rs 2,845.3 crore in the second quarter of the current financial year from Rs 1,874.8 crore in the same period a year ago.

“With the grounding of Boeing 737 MAX, the company continues to incur various costs and losses with respect to these aircraft. The company is in the process of determining the costs and losses (including opportunity losses) incurred by it and has initiated the process of seeking reimbursements and claims from the aircraft manufacturer,” the release said.

Earlier this year, SpiceJet grounded 13 MAX planes after a worldwide grounding of such aircraft in the wake of two deadly crashes. SpiceJet CFO Kiran Koteshwar told PTI that if the MAX aircraft weren’t in the system, then the loss would have been less. “It is an official recognition of expenses sitting on my P&L (Profit & Loss) now… rental of the aircraft, maintenance, salaries of the grounded crew and the parking charges. We have accounted only for those which comes to around Rs 177 crore…,” he noted.