SpiceJet loss widens 'due to new accounting norms'

NEW DELHI: SpiceJet on Wednesday said that its losses during the second quarter of the current fiscal has widened to 462.6 crore, as against losses of 389.4 crore it had incurred during the same period last year. The airline also said that higher losses were due to new accounting norms.

The private carrier’s losses widened despite it posting a 52% increase in second quarter operational revenue to 2,845.3 crore as it added more destinations and expanded its fleet of passenger and freighter aircraft.

Indian airlines are posting losses due to low passenger yields as carriers are competing with each other to fill their planes. SpiceJet’s low-cost peer IndiGo, which is country’s largest domestic airline, had also reported record losses of over 1,062 crore.

SpiceJet also said that its losses were higher due to the grounding of Boeing 737 Max. “This loss includes a loss of 180.3 crore on account of accounting standard IND-AS116, without which the loss is 282.3 crore,” the airline said. The airline has also said that it is in the process of seeking a claim from the aircraft manufacturer.

“With the grounding of Boeing 737 MAX, the company continues to incur costs and losses. The company is in process of determining the costs and losses and has initiated the process of seeking reimbursements,” the airline said.

SpiceJet said that the future of aviation, as it enters the peak travel phase, looks better with the hope that demand in the economy is likely to revive.

“With the industry’s growth rate slowing down in the past few months, the impact is evident on the bottom line. We, however, remain optimistic that the sector will regain the lost momentum as the inherent demand remains very strong,” SpiceJet chairman and managing director Ajay Singh was quoted as saying in the release.

The airline expects that the return of Boeing 737 MAX will drive its growth momentum. “The likely return to service of the 737 MAX early next year, and as indicated by Boeing recently, would mean that SpiceJet has at its disposal more than 25 brand new planes and we look forward to it. The return of the 737 MAX will provide a huge boost to our operations and we are confident that with the rigorous scrutiny, the MAX will be one of the safest airplanes ever to fly,” Singh was further quoted in the release.


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