Why SpiceJet Can’t Keep Up with Earnings Reports: An Explainer on India’s Struggling Airline

SpiceJet has a history of not filing its financial reports on time. The airline has postponed its earnings announcements at least three times recently.

In 2022, SpiceJet delayed its Q4 earnings for FY22 due to an IT system attack that disrupted the audit process. As a result, they released the January-March 2022 and April-June 2022 results together in September 2022.

In the following year, SpiceJet delayed its January-March 2023 earnings due to the illness of a key audit committee member. They also postponed the April-June 2024 earnings announcement, finally releasing both reports in August 2023.

The last earnings report from SpiceJet was for the July-September quarter of FY24, where they reported a reduced net loss of ₹449 crore, down from ₹830 crore the previous year. On Tuesday, the airline informed stock exchanges that it would release Q3 and Q4 earnings for FY24 on July 15 but did not explain the delay.

SEBI Regulations

Delaying financial reports has consequences. The Securities and Exchange Board of India (SEBI) requires listed companies to provide timely and adequate information to stock exchanges and investors.

SEBI rules state that companies must submit quarterly and year-to-date financial results within 45 days of the end of each quarter. Failure to do so can result in penalties. SpiceJet has faced penalties for non-compliance in the past, paying ₹5,900 for a one-day delay in Q4 2021, ₹59,000 for a 10-day delay in Q4 2022, ₹271,400 for a 93-day delay in annual results for FY22, and ₹88,500 for a 16-day delay in Q1 2022 results.

Current Challenges

SpiceJet is dealing with legal issues over unpaid dues to aircraft lessors, vendors, and suppliers, and faces contempt notices from the Delhi High Court and the National Company Law Tribunal.

The airline’s market share has declined sharply over the past five years, dropping to 4% of the domestic market in May 2024, down from 5.4% in May 2023 and 14.8% in May 2019.

“If a company is not declaring results on time, it is going to have a major impact on investor sentiment. Good or bad, a company has to disclose results on time,” said Kranthi Bathini, an equity strategist at WealthMills Securities Pvt Ltd.

Bathini noted that the aviation sector is doing well, with growing tourism and stable crude oil prices. He mentioned that recent funding and Qualified Institutional Placement (QIP) have generated positive sentiment for SpiceJet.

Recent Developments

In December 2022, SpiceJet’s board approved raising ₹2,250 crore from 64 entities, including financial institutions, foreign investors, high-net-worth individuals, and private investors through equity shares and warrants. In February 2024, the airline secured an additional ₹316 crore, bringing the total raised to ₹1,060 crore through its preferential issue.

Earlier this year, SpiceJet laid off about 1,500 employees, roughly 15% of its staff, following a two-thirds reduction in fleet size due to lack of funds. The airline expects to save about ₹100 crore annually from these measures.

Elara Securities estimated SpiceJet’s revenue at ₹1,876.8 crore and an adjusted net profit of ₹275.1 crore for the latest period. The company had a total income of ₹2,499 crore and a consolidated net loss of ₹6.2 crore for the same period the previous year.