SpiceJet seems to have pushed back a turnaround and is expecting to close this fiscal too at a loss.
Airline may post a loss of Rs40-60 cr
NEW DELHI: SpiceJet seems to have pushed back a turnaround and is expecting to close this fiscal too at a loss. Citing continued rise on aviation turbine fuel (ATF) prices for the delay in a breakeven, executive chairman Siddhanta Sharma said on Tuesday said the company may post a loss of Rs 40-60 crore in 2007-08.
“It (a turnaround) doesn’t look doable for the fiscal year because fuel prices went up by about 15% (from November to January). But we expect the next fiscal to be profitable,” Sharma said.
For the quarter ended December 31, 2007, SpiceJet posted 22.5% lower net profit at Rs 9.3 crore (Rs 12 crore). However, net sales rose by 71% at Rs 438 crore (Rs 256.14 crore).
But the company’s precarious financial health has not stopped it from planning fleet expansion.
The board of directors of SpiceJet has approved purchase of 10 new 737-800 aircraft whose deliveries will begin in 2011. The order is worth about $620 million but the company has not yet finalised funding routes for this order.
Sharma said there were no plans to launch long-haul international routes using these aircraft.
“The new orders will take care of our international needs. We are looking at the Middle East, Central and South East Asian destinations only since our low-cost model works best on short-haul routes.”
On the domestic front, the airline has opened two new stations — Bagdogra and Vizag — in the last quarter.
Dismissing reports that the company may soon see its single largest foreign investor - Istithmar World - selling out, Sharma said the Dubai-based company has no intention of offloading its 13.42% direct holding.
Tom Ronell, CEO of Istithmar, said that his company holds $37.5 million worth of convertible bonds in SpiceJet (in addition to the direct shareholding) but these come up for conversion only in 2010. “We are not looking to sell, no other investor is thinking of selling either.”
Besides promoter Ajay Singh’s 12.4% equity in the company, Kansagra holds another 12.5% whereas 14% rests with foreign institutional investors and 40% with the public.
Then, Goldman Sachs holds $42.5 million worth of convertible bonds.
Sharma said that Istithmar is open to increasing its investment in the company in case SpiceJet decides to expand equity in the future.
b_sindhu@dnaindia.net
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