Grounding of MAX aircraft clouds SpiceJet’s Q4 profit performance

For the March quarter, SpiceJet Ltd had to cope with the ban on Boeing 737 MAX aircraft in mid-March. The low-cost airline grounded 13 of its MAX aircraft.

Kiran Koteshwar, chief financial officer at SpiceJet, said: “Even though our MAX aircraft were grounded, we continued to incur expenses on them. “This also limited our ability to take advantage of the increased pricing environment as passengers (of cancelled MAX fights) had to be accommodated on existing flights.” What this means is that the company’s costs remained elevated at the expense of loss of capacity and revenues from MAX aircraft groundings, he explained.

In fact, even as the fuel cost per available seat km declined by about 6% year-on-year, non-fuel cost per available seat km increased by 7%, primarily driven by the increase in lease rentals. This, at a time when revenue per available seat km increased at a slower pace of 3.4%.