NEW DELHI: Troubles at Jet Airways have helped rival carriers IndiGo and SpiceJet to bounce back to profit.After IndiGo registered a 401 per cent jump in its Q4 profit to Rs 589.60 crore, SpiceJet, which recently inducted its 100th aircraft, on Tuesday reported 22 per cent jump in net profit for the March quarter despite the grounding of 13 Boeing MAX aircraft.
The airline reported a profit of Rs 56.3 crore for the quarter ended March 31, 2019 as against Rs 46.2 crore in the same quarter last year. The reported profit does not include any form of reimbursements or compensation on the grounded aircraft, for which SpiceJet is working with the manufacturer, the airline said in a statement.
Its capacity (in terms of seat kilometres) was up by 21 per cent during the quarter and revenue received a major boost from the increased airfare. Revenue from operations rose by 25 per cent to Rs 2,477 crore during the quarter as compared to Rs 1,995.04 crore in the corresponding quarter of the earlier fiscal.
Analysts tracking the sector said defunct Jet Airways played an important role in helping SpiceJet and IndiGo improving their finances.
“The bounceback is an outcome of Jet’s temporary grounding. Decrease in competition coupled with stable crude prices has supported the financial performance of airline companies in Q4,” Ashish Nainan, Research Analyst, Care Ratings said.
The trouble at Jet Airways not only reduced competition but also gave airlines a chance to increase fares. SpiceJet admitted its average fare was up by 11 per cent. This helped the two carriers to cut losses for the full financial year after a forgetful first six months. Ajay Singh, chairman and managing director of SpiceJet, said, “SpiceJet has posted a strong recovery in the last two quarters after suffering a loss of Rs 427.5 crore in the first two quarters due to a steep increase in fuel costs and sudden depreciation of the rupee.”
ANALYSTS BULLISH
Analysts are bullish on IndiGo and SpiceJet as they aggressively expand their fleet and add new routes to benefit from the shutdown of Jet Airways.