SpiceJet MD: Intend to expand the business considerably over the next 2 years; stock ends 6% higher

SpiceJet MD said, the pandemic has given us an opportunity to be of service to our country by leveraging our cargo operations for supplying essentials.

Dec 03, 2020 04:12 IST India Infoline News Service

SpiceJet, Chairman and Managing Director, Ajay Singh in the company's annual report said, the global aviation industry is presently flying through rough weather and SpiceJet is no exception.

Singh talking about FY20 performance in the annual report said, "FY 2019-20 has been another such year where we once again demonstrated our ability to overcome the challenge. The year started with the worldwide grounding of Boeing 737 Max following two unfortunate incidents due to technical reasons. These fuel-efficient aircraft were a core part of our growth and cost reduction strategy, and the overnight grounding of 13 of our Boeing 737 Max fleet threw open a major challenge of flight cancellations and hassles for passengers. However, SpiceJet acted fast and re-accommodated passengers to ensure they were in no way affected by it. The incident also forced SpiceJet to use age-old aircraft having higher operational costs and at the same time bear the fixed costs associated with the Max fleet, resulting in a significant impact on profitability."

Further, he said, as the year progressed, the aviation industry was further hit by hike in aviation turbine fuel (ATF) prices and rupee depreciation. The year finally ended with an unprecedented crisis due to the global outbreak of Covid-19 pandemic which brought the world to its knees, shutting down economic activity and forcing people to stay at home. Nations, including India, closed their borders and restricted air travel, hitting tourism and businesses worldwide.

Talking about 2020 performance, Singh said, "While the passenger travel started declining since the beginning of 2020, the third week of March saw complete halt of domestic and international flights due to nationwide lockdown to contain the virus spread. The move, while necessary, affected SpiceJet and other airlines."

He said to his shareholders that with the pandemic taking a tragic toll on lives and livelihoods, never in recent memory has there been a greater need for empathy and compassion than now. SpiceJet was among the first, across the industry, to show that it cared as much for the nation and its people as for sustainable returns to shareholders.

On operational services, Singh said, "We consolidated operations at Mumbai Airport, shifting from Domestic Terminal (T1) to the world-class Terminal 2 (T2) at Chhatrapati Shivaji Maharaj International Airport. Similarly, at Delhi Airport, we streamlined operations by shifting to Terminal 3 from Terminal 2. These developments will enable us to deliver a hassle-free travel experience to customers. We were also allotted additional departure slots at key airports including Mumbai and Delhi."

Going forward, Singh says, "The global aviation industry is presently flying through rough weather and SpiceJet is no exception. In spite of the current situation, SpiceJet is on course to becoming a world-class Indian airline in the true spirit of a strong, Aatma Nirbhar (self-dependent) India. Our immense flexibility to upsize and downsize capacity as per the demand outlook and adjust to any situations makes us a sustainable airline in the challenging Indian aviation space."

He also added, "The pandemic has given us an opportunity to be of service to our country by leveraging our cargo operations for supplying essentials. Having experienced success in cargo operations, we are extremely confident on this business and intend to expand it considerably over the next two years."

After the MD speech in the annual report, SpiceJet stock closed at Rs81.35 per piece on Thursday's session, up by 5.79% on Sensex. 

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