The airline auditors in their recent report have cast doubts over the ability of media baron Kalanithi Maran’s budget carrier to run it as a “going concern”.
The airline has reported 5th straight quarter of net losses for the July-September period, at Rs 310 crore, although it is down from the year-ago period when it had a net loss of Rs 559 crore.
The losses came down as the airline witnessed a 15 per cent growth in total revenue. For the past fiscal, the airline had reported a record loss of a little over Rs 1,000 crore.
“The airline is losing its flight crew at a regular interval. In the last six months alone as many as 40 pilots have quit the airline, citing uncertain future,” an industry source told PTI.
The pilots who have parted ways with SpiceJet include the commanders, he said adding that those who resigned did not want to take a chance, particularly after the grounding of the Kingfisher Airlines.
According to the source, the quitting of these pilots have also impacted the airline’s operations significantly with its flights either delayed or at times having repeated cancellations. The airline had last week said it had reduced its fleet by 10 planes from 48 to 38 over the past few months.
Repeated phone calls and a text message sent to SpiceJet spokesperson remained unanswered.
For September, the airline’s on-time performance stood at 81.9 per cent, and was only second to the national carrier Air India, which clocked a poor 75.2 per cent.
The Gurgaon-based no-frills carrier, which has failed to secure required funds to overcome the cash-crunch, has been going in for advance discounted sales to mop up working capital from time-to-time, starting this January.
Meanwhile, the airline’s auditors SR Batliboi & Associated have red flagged its concerns saying, “as of September 30, 2014, the company’s total liabilities exceed its total assets by Rs 1,459.7 crore. These conditions indicate the existence of a material uncertainty that may cast significant doubt about the company’s ability to continue as a going concern.”
The auditors point out that the loss would have been higher but for non-provision of Rs 7.5 crore for interest.
Including this, the net loss for the September quarter would have been higher by a similar amount.
But SpiceJet has claimed that its market stimulation has worked as its topline grew 15 per cent year-over-year in Q2, ahead of capacity increase of 7 per cent.
“SpiceJet’s market stimulation efforts have had a positive impact on the travel industry as a whole by helping increase demand to fill seats that would otherwise go empty. This has benefitted not just the airline through incremental revenue, but also customers who are getting much more affordable fares if they are willing to book early,” the airline said.
Repeated discounts launched by Spicejet have led to a 28 per cent growth in domestic passenger traffic in September, traditionally the weakest traffic month of the year, the airline claimed.
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