NEW DELHI: Wednesday turned out to be a gloomy day for India’s aviation sector as two leading airlines —IndiGo and SpiceJet — reported record quarterly losses. IndiGo posted its biggest quarterly loss at Rs 2,844 crore during Q1 of FY21, while SpiceJet’s net loss was at Rs 807.08 crore for the quarter ended March 31 FY20. Both airlines blamed the Covid-19 pandemic for their dismal performance.
While the two figures are for two different quarters and does not put performance of the airlines in the same league, it certainly speaks of the deep crises faced by the industry, especially SpiceJet.
The carrier’s auditor in a note has raised significant doubt on the company’s existence as a going concern. “We draw attention to Note 11 in standalone Ind AS financial statements which, indicate that the company has accumulated losses and its net worth has been fully eroded, the company has incurred a net loss during the current and previous year and, the company’s current liabilities exceeded its current assets as at the balance sheet date,” auditor SR Batliboi & Associates LLP, said.
“These conditions, along with other matters... cast significant doubt about the company’s ability to continue as a going concern,” it added. Promoter Ajay Singh, however, is optimistic about the future of his airline. Singh said that two key factors that had adversely impacted SpiceJet’s performance was the COVID-19 pandemic that started affecting demand from mid-February and grounding of the 737 MAX, which has been out of service for over a year now.
“... I’m confident that things will only improve in the times to come.”As for IndiGo, its number one priority remains its cash balance. The carrier said it had a total cash balance of Rs 18,449.8 crore. It has already reduced its workforce by 10 per cent and is implementing steeper paycuts to offset the impact of Covid-19 on its revenue.