EBM News
EBM News

SpiceJet profit up 21 per cent, Boeing offers compensation for MAX 737 losses

NEW DELHI: Budget carrier SpiceJet on Friday posted 21 per cent jump in its net profit for the quarter ending December 2019 to Rs 73.2 crore against Rs 55.1 crore profit it has clocked in the same quarter in the last fiscal. The profit is likely because of the interim offer of compensation it received from Boeing on the grounding of its Boeing 737 MAX aircraft.

“Based on the current stage of discussions with, and considering the interim offer of compensation received from, the aircraft manufacturer, its own assessment and legal advice obtained by the group, management is confident of collection of the above income recognised by the group,” it said.

The airline’s losses during the second quarter had widened to Rs462.6 crore. SpiceJet said, “This profit (in Q3) is after a non-cash forex charge on account of Ind AS 116 of Rs75.9 crore without which the profit would have been Rs149.1 crore.” The domestic carrier now expects the return of the 737 MAX in mid-2020 “to boost operations and profitability”.

Further, 737 MAX aircraft continues to remain grounded worldwide following the crash of an Ethiopian Airlines near Addis Ababa last year. In Q3 of FY20, SpiceJet recorded a 47 per cent rise in operational revenue to Rs3,647.1 crore. Going ahead it expects to grow profitably while maintaining tight control over costs in 2020.

“We were expecting the MAX to return to service by January but that hasn’t happened. The continued grounding and the delay in its return to service have undoubtedly hit our growth plans adversely and resulted in inefficient operations,” said Ajay Singh, chairman and MD, SpiceJet.