New York: SpiceJet Ltd. Chairman Ajay Singh wants to expand the company’s fleet of passenger jets and cargo haulers as the Indian airline’s financial performance recovers after a punishing stretch during the pandemic.
Singh said the no-frills carrier has a “reasonable chance” of reaching break-even this quarter through December thanks to a combination of cost cuts, renegotiated aircraft leases, an uptick in air travel traffic in India and the growth of the company’s new cargo operation.
“We are easily the largest player in that space in our part of the world,” he said in an interview at an annual International Air Transport Association meeting in Boston. “We, like other airlines, made losses in this period but on the other side we built out this asset.”
SpiceJet posted a loss of 7.3 billion rupees ($98 million) in the June quarter, missing analyst estimates of a 6.3 billion shortfall. Salaries have now been restored for all employees, Singh said, after the company deferred pay for many earlier this year, a move that prompted a strike at Delhi airport in September.
SpiceJet rose 1% Tuesday morning in Mumbai. The shares are down 20% this year.
SpiceJet to Raise $340 Million in Share Sale to Bolster Finances
Singh said he expects SpiceJet’s cargo business to reach $1 billion in revenue in two to three years from roughly $350 million expected this year. The business needs “at least” 10-15 more wide-body jets to expand capacity from its existing fleet of nine, he said, with the first additions coming as early as next month.
Singh said he’d like to add another 30-40 passenger aircraft to SpiceJet’s fleet over the next two years, on top of an existing order book that includes 155 Boeing Co. 737 Max aircraft. Indian regulators cleared the Max to fly again in August after a lengthy grounding following deadly crashes in Indonesia and Ethiopia.
SpiceJet will start flying the Max again from Oct. 8 and is hopeful of reaching a settlement with Boeing “very soon” over costs incurred when the plane was idled, Singh said. He declined to comment on the specifics of a potential compensation agreement with Boeing.
“SpiceJet will definitely need capacity because a lot of our old aircraft are slated for lease returns over the next year,” he said. “In any case, SpiceJet’s strategy always was to convert to newer aircraft, more fuel-efficient aircraft, and try to offer a better product to consumers.” –Bloomberg
Also read: Tatas put in bid for loss-making Air India as disinvestment process enters final stage