Hyderabad, Dec 16: India’s low-cost airline SpiceJet expects to complete its financial turnaround in a year’s time.
SpiecJet Chief Operating Officer Sanjiv Kapoor told reporters here Monday that it would take a year to have SpiceJet as a completely new airline.
“It doesn’t mean we are going to be making losses for the next one year. It means that one year later we will be in a position where we will complete the turnaround. I expect the airline to start getting profitable before the (calendar) year is over,” he said.
Kapoor said they were in talks with strategic investors but declined to go into the details.
“There are a few strategic investors we are talking to. It is not 20 and it is not two. We have our plans and we are executing them,” he said. He was also hopeful that this would help the company wipe out all its accumulated losses.
He said he expects the performance during the current quarter to be better than the previous quarter, despite the fact that both the quarters were down year on year. During the second quarter ending September, the airline had a net loss of Rs.559.49 crore.
Kapoor was confident that it would be a high growth path for SpiceJet after achieving the turnaround. The airline is identifying the loss-making routes but he denied that they plan to shrink the network.
“We will be rationalizing. Our plan is to redeploy our fleet in to a network design that is more profitable for us,” he said.
SpiceJet currently has 42 Boeing 737s and 15 Bombardier Q4-100s. The company has also placed orders for 19 Boeign 737s. Kapoor, however, said the restructuring study would decide how many of the new aircraft would be used for replacement.
He admitted that low season (January to March) would be a challenge but hoped that turnaround would happen in the high season (summer).
SpiceJet has average load factor of 70 percent, and Kapoor contended that load factor this year was low for all airlines year on year basis.
He attributed this to airlines adding capacity and the low demand. He feels that due to upcoming general elections, there is wait and see attitude among corporate which is keeping the demand a bit cooler.
Kapoor believes that irrespective of who comes to power, India will be back in high growth mode after the elections.
On the competition SpiceJet and other players would be facing with the entry of foreign airlines, he said the Indian carriers need to get smarter, innovative and pull up their socks. He said the competition would benefit the consumers. He pointed out that SpiceJet was taking steps to achieve world class standards.