SpiceJet swings to quarterly profit; shares jump
NEW DELHI (Reuters) - India's No. 2 budget carrier SpiceJet (SPJT.BO) swung to a quarterly profit at the end of 2012, helped by higher fares in a market with reduced capacity, and said it would target a bigger slice of revenue from international flights in the future.
SpiceJet said on Monday it earned 1.02 billion rupees in October-December, compared with a net loss of 392.6 million rupees in the year-ago quarter. The news sent its shares up as much as 7.6 percent.
"Now international revenue is 7 percent of our total. We would like to grow that to about 20 percent over the next 18-24 months," Chief Executive Neil Mills told Reuters.
SpiceJet currently flies to 42 local destinations and 7 foreign destinations.
"We will continue to add international routes until we get up to the 20 percent proportional revenue that we are talking about," Mills said.
More international flights and lower fuel costs also helped fourth-quarter results, Mills said.
Fuel costs as a percentage of total revenue came down 5 percentage points to 45 percent in October-December, SpiceJet said in a statement. State taxes of as high as 30 percent make India one of the costliest aviation markets.
"The fact remains that the Indian airline industry continues to bear the brunt of extremely high incidence of taxation... (that) constitutes the biggest hurdle for domestic carriers in their quest for long term profitable growth," Mills said in an earnings statement.
SpiceJet said average passenger yields rose 29 percent in the latest quarter, a period that saw Kingfisher Airlines (KING.NS), once India's No. 2 carrier, grounding its fleet. A rise in passenger yields reflects higher airfares.
SpiceJet is widely believed to be a target for global suitors following a change to Indian law relating to foreign investment. The company has a relatively healthy balance sheet thanks to majority-owner Kalanithi Maran, a politically-connected business tycoon who has been pumping in money to the carrier on a regular basis, while other Indian airlines struggle to raise funds.
Qatar Airways and Malaysia's AirAsia Bhd (AIRA.KL) were reported to be interested in buying a stake in SpiceJet, but both the airlines have denied any such plan.
"We are looking for an investor, particularly a strategic investor. But we are really not in a particular hurry to do so, we have money in the bank today," Mills said.
"We are not desperate to do a deal. But we will do the right deal when it comes in the interest of shareholders and the company," he added.
SpiceJet also said it was confident it would be able to import jet fuel - thus avoiding state taxes of 30 percent - in the current quarter, after a last bureaucratic hurdle is crossed, Mills said.
Spicejet and other local carriers applied last year to import jet fuel but none have been able to do so yet due to inadequate infrastructure in the country's airports.
"We are ready to do it, pretty much...(we have finalised) 9 commercial contracts to do the import already."
SpiceJet shares, which have more than doubled in the past year, closed 5 percent up at 46.15 rupees on the Bombay Stock Exchange. (Editing by Sophie Walker)
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