Low cost carrier SpiceJet on November 13 reported widening of loss to Rs 462.6 crore in the three months ended September, mainly hit by expenses related to grounding of Boeing 737 MAX planes and changes in accounting norms. In the year-ago period, the airline’s loss stood at Rs 389.4 crore, according to a release.
Operating revenue rose to Rs 2,845.3 crore in the second quarter of the current financial year from Rs 1,874.8 crore in the same period a year ago.
The airline said the loss of Rs 462.6 crore in the latest September quarter was mainly on account of inflated costs with respect to MAX grounding and a seasonally weak quarter.
The figure includes a “loss of Rs 180.3 crore on account of accounting standard Ind AS 116”.
Indian Accounting Standard 116 or Ind AS-116 has come into force from April 1. It pertains to principles for recognition, presentation and disclosure of leases. Airlines mostly opt for sale and lease back of planes.
“With the grounding of Boeing 737 MAX, the company continues to incur various costs and losses with respect to these aircraft. The company is in the process of determining the costs and losses (including opportunity losses) incurred by it and has initiated the process of seeking reimbursements and claims from the aircraft manufacturer,” the release said.
SpiceJet Chairman and Managing Director Ajay Singh said the impact of the industry’s growth rate slowing down in the past few months is evident on the bottom line.
The continued grounding of the 737 MAX has hit growth plans adversely and resulted in inefficient operations and as a result increase in costs, he noted.
According to him, the likely return to service of the 737 MAX early next year and as indicated by Boeing recently, would mean that the airline has at its disposal more than 25 brand new planes.
“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,” he added.
The carrier has a fleet of 118 planes and on an average operates 630 flights daily.
Shares of SpiceJet declined over 1 per cent to close at Rs 113.70 apiece on the BSE.
News Source:- Moneycontrol