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SpiceJet flies back into the black

Posts net profit of Rs 22.51 crore in fourth quarter; runway cleared for getting blue chip investor on board

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White knight investor and original owner of SpiceJet Ltd Ajay Singh has managed to steer the budget airline out of turbulence zone through hard-nosed renegotiation on contracts and settlements, provisioning for aircraft re-delivery expenses and a net gain on an insurance claim that have helped it to register net profit of Rs 22.51 crore in the fourth quarter ended March 31, 2015 against a loss of Rs 321.51 crore during the same period last year.

The airline recorded a net profit after seven quarters. It also reported a positive earnings before interest, tax, depreciation and amortisation (Ebitda) of Rs 80 crore against a negative Ebitda of Rs 235crore in the previous year.
For the full year, the no-frill carrier narrowed its net loss by 31.51% to Rs 687.05 crore for fiscal 2015 compared with Rs 1,003.24 crore in the previous fiscal.

This paves the way for the airline to bring in 'blue chip' investors to recapitalise its business for further expansion.

"These results indicate that a recovery is in progress, and is the first tangible evidence of the ongoing revival. I am delighted to see the airline that I helped create this month 10 years ago starting to get back on its feet in this manner," said Ajay Singh, chairman and managing director of SpiceJet in a statement issued by the airline.

What has pushed SpiceJet to net profit is the extraordinary item of Rs 61.35, a net gain on an insurance claim for a Bombardier Q400 damaged during operations.

"The carrying value of the aircraft at the date of incident, net of unrecognised incentive credit was Rs 100.37 crore, which the company recorded as a loss in the current quarter. The company has received approval from insurers of aircraft for an insurance claim of Rs 161.72 crore. Of this, Rs 83.5 crore is payable to relevant aircraft lessor and financial," said a note signed by Singh.

Interestingly, the fourth quarter net profit has come at a lower total income of Rs 786.32 crore compared with Rs 1,300.75 crore in the previous quarter. For the whole year also, the total revenue was down to Rs 5,201.52 crore compared with Rs 6,304.23 crore.

After taking control of the airline, Singh has been working towards putting it back on the runway for a take-off. The airline was on the verge of collapse when he jumped in to rescue in December. Since then, he has kept the creditors at bay by assuring to pay them in time, paid off pending staff salaries, renegotiated contracts and settled aircraft lessor disputes to keep the carrier airborne.

On Thursday, the airline boards also recorded resignations of independent directors M K Harinarayanan and J Ravindran, who resigned on May 28 and May 29, respectively.

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