Indian airline Spicejet posted soaring profits for the second quarter, while Jet Airways’ prospects continue to plummet.
With mounting pressure on airlines to provide long-haul flights at increasingly lower costs, India’s budget airlines have been feeling the pinch. But last quarter, despite incidents that seemed to destine the airline for doom, Spicejet made a record profit.
The Gurgaon based airline reported a 788% increase in net profit for the June quarter, totaling INR 261.7 Crore (equivalent to nearly $36.7m). It also reported a 35% growth from operational revenue. During the quarter, the airline brought in an additional 32 aircraft to its fleet and launched 18 extra UDAN flights within India.
Success amid crisis
Earlier this year, the airline found itself in hot water when its Boeing 737 MAX aircraft were grounded after two separate crashes. Speaking about their success, chairman Ajay Singh suggested that profits would have been better had operations been allowed to take place as normal. In the earnings call, he said,
“The results would have been vastly better but for the painful grounding of the MAX aircraft. We look forward to their swift return to service in the near future…”
However, Singh also praised Spicejet’s “spectacular growth”, attributing its success to “[being] able to minimize passenger inconvenience by quickly filling the capacity gap created in India’s aviation sector.”
Spicejet’s passenger fares increased by 11% in the quarter. The additional aircraft inducted into the fleet afforded the carrier the ability to increase seat capacity by 31%. The airline boasted the best passenger load factor among the country’s airlines in the same quarter.
But it wasn’t just the passenger airline making an impression; SpiceXpress, its air cargo branch, has also experienced growth and was able to acquire an additional freighter for its fleet.
Spicejet’s attention is now turned towards the relaunch of its Boeing 737 MAX. Despite Boeing maintaining that the aircraft will return in the fourth quarter, other airlines have already started removing it from schedules until the start of the new year.
Jet Airways struggles to regain support
However, it’s not all good news for India’s airlines. In the shadow of Spicejet lies Jet Airways, still $3bn in debt. It’s struggling to regain momentum after operations ceased on April 17th, 2019, when emergency funding from the bank was denied. Recent calls for expressions of interest brought forward three potential investors, however, it’s not going well so far.
One of the three potential investors has already now withdrawn its interest. Volcan Investors pulled out of negotiations but suggest that their interest, in any case, was only “exploratory”. The deadline for investment has now been extended for a second time to September 12th.
Despite the rough state of affairs at Jet, the company does still present some value to an investor. A small pile of assets is up for grabs, as well as various periphery equipment and, probably the most valuable, Jet’s frequent flyer program.