InvestorQ : Why has Spice Jet reported such a huge loss in the Jun-20 quarter?
diksha shah made post

Why has Spice Jet reported such a huge loss in the Jun-20 quarter?

Answer
user profile image
Dia Deshpande answered.
2 weeks ago


There was little surprise about Spice Jet reporting a loss for the Jun-20 quarter as flights were shut down for a better part of the quarter and even subsequently only skeletal services have been permitted with lots of checks and balances.

For the Jun-20 quarter, Spice Jet reported a net loss of Rs.594 crore compared to a net profit of Rs.262 crore in Jun-19 quarter. Interestingly, this loss could have been wider but for the Rs.195 crore of compensation received from Boeing for the 13 grounded 737 MAX aircraft.

Of course, the principal reason for the widening of the loss was the total revenues for the Jun-20 quarter shrinking almost to one-sixth at Rs.515 crore. So, had it not been for the Boeing windfall, the actual losses would have been closer to Rs.800 crore.

Like any typical airline low capacity utilization leaves fixed costs unabsorbed. Spice Jet confirmed that it was only operating 47% of its aircraft fleet and its capacity utilization in terms of PSF was down 90%. This has led Spice Jet to defer many payments to vendors and even to statutory bodies.