Tuesday, November 18, 2014

SpiceJet may be no Kingfisher, but needs funds to turn things around

Two things are clear: SpiceJet will continue with its strategy of deep discounts to attract flyers and unless it gets recapitalized, a turnaround is far off.

The airline has seen losses go down by 45% in Q2 (a first in four successive quarters) as it increased revenues and yields while reducing costs and this has been possible in a large measure because of its pricing strategies which stimulated the market.
SpiceJet needs substantial funds to come back from losses.

But now, because of intensive fleet restructuring, SpiceJet's Boeing fleet is down by 9 aircraft compared to July. This means the airline has had to reduce daily flights by about 40 to take the number close to 300 - which in turn means its revenues and therefore finances may be impacted in Q3.

COO Sanjiv Kapoor said today that the fleet will be back to 35 Boeing aircraft (the Q400 fleet of 15 stays as it is) by December end but this could mean Q3 may not be a happy quarter for the ailing airline as revenues would fall on capacity shortage.
17/11/14 Sindhu Bhattacharya/First Post
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