Can SpiceJet avoid Kingfisher route?


SpiceJet posts record quarterly loss, screams the headline, but in reality its results are nothing worth writing about. The company has made so much losses over the past few quarters that it has completely eroded its net worth.

It is not the loss at the net level of Rs 559 crore for the September 2013 quarter that is worrisome, but it is the huge operating loss that questions the viability of the company. With its net worth completely eroded, rising operating losses will take the company down the same road as Kingfisher.

On a revenue of Rs 1,257 crore, the company made an operating loss of Rs 492 crore. With a negative net worth and a operating loss, the company will find it difficult to raise funds. Equity or loan from the promoter or a stake sale is the only way out for the company. Even Jet Airways makes losses, but it does mainly on account of interest outgo. Even with a small operating loss, Jet Airways is having difficulty paying its lessor and airport charges. Spicejet on the other hand is incurring losses on every passenger it flies.

Full report here Business Standard


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