Battling Turbulence

Most airlines are on the verge of crash-landing as the likes of SpiceJet, IndiGo and GoAir face acute losses due to the economic slowdown and Covid-induced lockdowns

- MANU BALACHANDRAN

Barring Air India, if there is an Indian airline that runs into turbulence often, it is SpiceJet.

Since its founding in 2004, the Gurugram-headquartered airline has changed hands a few times and has run into massive losses regularly, even being on the verge of shutting down, before staging remarkable turnarounds. This year isn’t any different . In the wake of the economic slowdown and the Covid-19 crisis, SpiceJet finds itself in familiar territory with mounting losses and net worth eroding significantly.

On July 29, the airline reported its highest ever quarterly loss of ₹807.07 crore in the March-ended quarter compared to a net profit of ₹56.29 crore in the year-ago period. The airline reported a full-year loss of ₹934.76 crore in 2019-20 compared to ₹316.08 crore in FY19. The only silver lining was that its revenue rose by 42.65 percent to ₹13,206.42 crore.

What is worrisome, however, is that like 2014—when SpiceJet stalled operations before a new promotor stepped in—the airline’s net worth has entered into negative territory at ₹1,579.2 crore as of March 31. “The company has incurred a net loss during the current and previous year, and its current liabilities exceeded its current assets in the balance sheet to date. These conditions indicate the existence of a material uncertainty that may cast significant doubt about the airline’s ability to continue as a going concern,” says SR Batliboi and Associates Llp, the company’s auditors, which had been raising similar concerns during the past quarters.