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SpiceJet - Likely To Break Even By May

Delhi-based low-cost carrier SpiceJet is likely to achieve breakeven by the end of its first year of operations in May. The airline has already posted a positive operating profit in its second quarter of operations, according to senior company executives.

SpiceJet, which currently operates over 36 daily flights connecting 11 destinations in the country, commenced operations in May 2005. According to the Bombay Stock Exchange data, the airline posted a loss of Rs 23.71 crore during the period March 1 to May 31, 2005. Chairman Siddhanta Sharma said the airline is expected to record a revenue of Rs 275-300 crore in the current financial year.

Director Ajay Singh said the airline will be inducting seventh aircraft to its fleet in May. “SpiceJet inducted its first self-owned Boeing 737-800 recently. The aircraft is flying on the Delhi-Goa-Delhi route via Mumbai,” he said. He pointed out that the airline has now increased its capacity to over 7,000 seats per day with the induction of sixth aircraft. “We are expecting three more new aircraft and 4 leased ones to join our fleet this year. It is expecting deliveries of 10 Boeing 737-800s each in 2007 and 2008,” he said.

According to industry analysts, the carrier will have to shell out $1.2 billion for fleet acquisitions as the listed price of an Boeing aircraft is $60 million. “With better negotiation, SpiceJet could manage to bring down prices to $45-50 million per craft. The company has plans to acquire Boeing 737-900 ER aircraft for short-haul international destinations in future,” industry sources said.

Singh said currently the airline has a market share of 6.3 per cent, which it wants to raise to 20 per cent by 2008. “In the first three quarters of its operations, SpiceJet has achieved a load factor of 88 per cent. We will be adding two more destinations soon to strengthen our network further,” Singh said. About funds for fleet acquisition, Singh said the airline is exploring the option of issuing foreign currency convertible bonds (FCCBs) on a future date.

Earlier, SpiceJet has allotted FCCBs aggregating $80 million for meeting capital expenditure. The FCCBs with a maturity of over five years will be listed on the Luxembourg Stock Exchange. These are convertible into equity shares at a conversion price of Rs 90 per share.

-Business Standard