Chennai, feb 7 (TruthDive): The Kalanithi Maran-owned airline on Monday reported a loss of Rs39.3 crore for the three months to December as against a profit of Rs94.44 crore a year ago. It has joined the list of private carriers that are in the red.The GOM has cleared the proposal to allow import of aviation fuel by private carriers.
Spice Jet auditors S R Batliboi & Associates said accumulated losses of Rs1,077.81 crore as of December 31 have “substantially” eroded the company’s net worth, raising questions about the company’s ability to continue as a “going concern”, reports Economic Times.
The auditors said “the losses would have gone up further had SpiceJet made a provision for interest relating to earlier years on the outstanding inter-corporate deposits which the Gurgaon-based airline has under-reported.” Chief executive officer Neil Mills told ET that differences on account of foreign currency borrowings will be corrected soon. He said the objection raised by the auditor was based on short-term reporting. “Half of the impact of the deprecating rupee has been factored in,” Mills said. The company suffered a loss of Rs30 crore for the third quarter on account o rupee depreciation against the dollar. But Mills also said the airline is considering recapitalisation options though they are in a comfortable position as a going concern and the airline will be able to raise funds as and when required but it is not going to raise funds in a hurry. He said the promoters demonstrated their commitment by pumping in Rs200 crore last year. Mills said SpiceJet will add another 10 aircraft this year. Of these, seven will be the Bombardier Q400s, its specialised regional aircraft. The airline expects a growth of 17% for the year but says a lot depends on how fuel prices behave. Fuel costs have gone up 90% quarter over quarter and is eating into the industry’s profitability.
“The GoM has cleared the proposal to allow Indian carriers to import fuel directly and the final clearance will come from the Cabinet,” Union Civil Aviation Minister Ajit Singh said after the GoM meeting.
Average tax on jet fuel in India is 24%, which is second highest in the world ,second only to Bangladesh at 27%. Fuel cost is around half an airline’s total operating cost is one of the reasons for losses incurred by them.
Allowing any airline to import oil directly will require the government to change the Foreign Trade Policy (FTP).