How SpiceJet turned a profit in Q4
Amid the events at Ahmedabad last week, what went unnoticed was SpiceJet declaring its Q4-FY25 and full-year FY25 results late on Friday evening. The airline reported a profit after tax of ₹ 319 crore in Q4-FY25 and ₹ 48 crore in FY25, driven by a profitable Q4. All airlines benefited from the once-in-a-lifetime Maha Kumbh at Prayagraj, and SpiceJet had a significant portion of its total capacity deployed to Prayagraj from various points in the country.
This comes at a time when the airline completed a QIP of ₹ 3,000 crore. Out of the above QIP proceeds, ₹ 2,699 crore has been utilised for the payment of statutory dues, settlement of liabilities of creditors, ungrounding and maintenance, new fleet induction, employee-related dues, airport dues, general corporate and share issue expenses, and the balance has been temporarily invested. However, even in one of the historic quarters in the history for the industry, the airline's income from operations was less than its expenditure and the profit was powered by other income, which is the restructuring of lease obligations, part of settlement or waivers and will have a resultant gain of ₹ 528 crore. As of that date, the company had negative retained earnings of ₹ 7,764.8 crore, and the current liabilities exceeded current assets by ₹ 3,845 crore as at 31 March 2025. The company has a positive net worth of ₹ 683 crore as at 31 March 2025.
The SpiceJet-Emirates codeshare may not have materialised, but the carriers do interline. For SpiceJet, Dubai is one of the strongest cities in their network, with flights from nine cities. Some of those cities are the ones from which Emirates has no flights, giving a benefit of one-stop connectivity to the world.
In early January this year, the airline said it would operationalise 10 grounded planes by April. However, that has not materialised with the airline citing the delay due to supply chain constraints worldwide. As of the end of December, 28 aircraft were operational with SpiceJet, nine of which were wet-leased. As of the end of March 2025, only 25 aircraft were operational, seven of which were wet-leased. The freighter fleet continues to be grounded.
Last year, SpiceJet settled multiple disputes that had reached the doorstep of the court of law. These included aircraft lessors and engine lessors, amongst others. Part of the settlement was to transfer some planes to its own books. This is now reflected for SpiceJet, with 19 out of 24 Q400 planes being owned by SpiceJet, a critical asset not just in operations but also on the balance sheet.
However, a grounded plane is of no use, either for operations or sale or sale and lease back. How soon SpiceJet can unground the Q400s will answer many questions. The airline could potentially use them to operate routes under UDAN to get confirmed revenue and monopoly flights, possibly lease out planes to other carriers to earn lease revenue, a confirmed stream and source of money or even do a sale and lease back agreement to get a chunk of cash in the deal for 19 planes and then use it to further unground other planes as well as retire debt, making the balance sheet even better.
The airline improved its operational parameters as the last quarter progressed, reducing cancellations and improving on-time performance, but it only maintained market share and did not gain it. As market share is largely a factor of capacity share, Akasa Air has gone ahead, and SpiceJet will likely find it hard to catch up, making it the fifth-largest carrier in India behind IndiGo, Air India, Air India Express, and Akasa Air. However, it also remains the last among the major carriers since all others are regional carriers.
SpiceJet continues to be in a 'turnaround in progress' mode for eternity. It has always had the ability to strike back with a surprise when things looked bleak. However, with all the fund infusions done last year, the balance sheet is cleaner than ever before. How can the airline build on from this base?
The airline is expanding again, as it has returned to Kathmandu and is back to operating short-period flights to Fujairah, to cash in on the high traffic period. However, most of its planes are older generation ones, and sooner or later, it has to look at revisiting its order for the MAX 8 or look for other alternatives available in the market, which can be a game-changer.
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