Financial Round Up
SpiceJet to follow Kingfisher's fate?
June 10th 2014
Chennai-based low-cost carrier (LCC) SpiceJet reported a net loss of Rs10 billion (US$167 million) in the financial year 2013-14, its third consecutive and biggest annual loss so far. Read More »
The airline that has long been rumored to be in a state of crisis blames increased operating costs as a result of a weakening Indian rupee and softer passenger demand due to slower economic growth for its increasingly serious problems.
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SpiceJet is desperately trying to improve its revenue management and, if we are to believe the latest figures, they might be on to something. RASK in the three-month-period ended March 31, 2014 was up 5%; CASK, however, increased 12% year-on-year.
The airline’s management still remains in a state of turmoil. In June 2013 it lost its COO Harish Moideen Kutty who had only been in office for just over a year and in July 2013 CEO Neil Mills was asked to leave without any explanation given.
The management challenges stand amidst allegations that the airline’s cash flow is coming to an end with lessors voicing concerns over SpiceJet continuously being late on its lease payments.
This brings back to life the bitter memories of Kingfisher’s demise. The signs were similarly disconcerting then with senior management coming and going and Kingfisher defaulting on its lease payments to aircraft lessors and bank loans.
More potential trouble for SpiceJet is on the horizon with the launch of AirAsia India – also based out of Chennai – imminent.
It is no surprise then that SpiceJet’s billionaire owner Kalanithi Maran is allegedly in “advanced” talks with potential funders to inject fresh capital into the embattled carrier.
