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Despite a weak Q2, SpiceJet outlook is positive ahead of holiday season

Despite a weak Q2, SpiceJet outlook is positive ahead of holiday season

Despite a weak Q2, SpiceJet outlook is positive ahead of holiday season
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By CNBCTV18.com Nov 16, 2022 5:40:57 PM IST (Published)

In the second quarter ended September 30, losses widened to Rs 837.8 crore for SpiceJet as a surge in fuel prices and depreciating rupee caused turbulence for the budget carrier. SpiceJet had reported a net loss of Rs 561.7 crore in the year-ago period

Despite a weak performance in the second quarter of this financial year, the outlook for budget airline SpiceJet Ltd is positive given that Q3 is a seasonally strong quarter.  In the second quarter that ended September 30, losses widened to Rs 837.8 crore for SpiceJet as a surge in fuel prices and depreciating rupee caused turbulence for the budget carrier. SpiceJet had reported a net loss of Rs 561.7 crore in the year-ago period.

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Total revenue in the second quarter stood at Rs 2,104.7 crore against Rs 1,538.7 crore in the same period a year ago. At the same time, operating expenses were Rs 2,942.6 crore during the quarter compared with Rs 2,100.4 crore in the year-ago period, PTI reported.
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In the calendar year 2022, SpiceJet shares have also declined 43 percent. Passenger load at 85 percent offered some cushion as it was higher than IndiGo’s 79 percent. IndiGo is the country’s largest domestic airline by market share.
Despite the weak performance, analysts believe yields of the budget airline to improve in the third quarter on the back of strong demand during the winter season.
“We anticipate (SpiceJet’s) yields to improve, given the festive demand, in conjunction with better operating profitability as restructuring benefits kick in from Q3FY23," Mint quoted analysts at Nuvama Research as saying in a report on November 15.
The addition of the 737-8 MAX aircraft to SpiceJet’s fleet is likely to boost the airline’s competitiveness as it can accommodate more people with its higher capacity of 220 seats as against 180 in 737 NG and also has 20 percent higher fuel efficiency.
The enhancement of the emergency credit line guarantee scheme (ECLGS) limit to Rs 1,500 crore by the government would provide some support to SpiceJet.
“Having completed a series of settlements with most of our major partners and the upcoming hive-off of our cargo and logistics arm, we expect significant improvements in our operating environment,” PTI quoted SpiceJet chairman and managing director Ajay Singh as saying.
 
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