Spicejet profit slides on higher fuel costs, drop in rupee

The dual headwinds of higher aviation fuel costs and the slide in rupee value has impacted the financial performance of Indian carrier SpiceJet, which reported a Q3 loss of Rs 389 crore ($53.8 million)

The low cost airline, which operates daily flights to Dubai from multiple cities in India, reported a profit of Rs 105 crore ($14.5 million) in Q3 last year.

SpiceJet reported a 3.7 percent rise in its total income at Rs.1,910.3 crore during Q2, as against Rs 1,842.0 crore in the same quarter last year.

SpiceJet’s aircraft fuel expenses climbed 55.8 percent to Rs 845 crore during the second quarter, while total income from operations rose 3.8 percent, the company said in a statement.

Jet Airways, another leading Indian carrier, announced a loss of  Rs.1,297.46 crore ($177.7 million) in the July-Sept 2018 quarter, against a profit of Rs.49.63 crore ($68.5 lakh) in the corresponding year ago period.

Aviation industry analysts said a combination of rising oil prices, high fuel taxes, a weak rupee, low fares and intense competition are the major reasons for slashed profits in the Indian market, amongst the world’s fastest-growing aviation market, clocking 20 percent annual passenger growth.

The Gurgaon-based SpiceJet said that its results were expected to uptick over the next two to three quarters and that it would take deliveries of 10 Boeing 737 MAX aircraft and 4 Q400 aircrafts during Q3 and Q4 FY19.

With the current trend of falling crude prices and strengthening rupee and the new aircrafts being Inducted are engineering and fuel efficient planes, the airline said it expects its financial performance to improve over the coming 2 quarters.

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