Operational costs clip SpiceJet's wings

September 28, 2013 18:07
Operational costs clip SpiceJet's wings

Airlines have been facing the heat with economic airline SpiceJet struggling to stay afloat. In recent turn of events, rising operational costs have clipped the firm's net worth. This has in turn raised further concerns over the airline's ability to fly on.

After Kingfisher hit the halt button, it is now the turn of SpiceJet with increasing worries regarding operational losses. The airline's auditors SR Batliboi & Associates LLP revealed in their latest annual report that, "The appropriateness of the going concern assumption is dependent on the company's ability to establish consistent profitable operations as well as raising adequate finance to meet its short-term and long-term obligations.”

This means bad news for the firm. Continuing from last year's Rs 605.8 crore loss, SpiceJet posted a loss of Rs192 crore this year. The airline reported that its losses are 50% higher than the net worth.

Recession in domestic air travel, coupled with high fuel costs and interest rates shrunk the businesses of various airlines, including Jet Airways. Adding to these troubles is the imminent arrival of two major airlines in India, doubling the need for SpiceJet to get its finances straight. Overall, Indian Airlines posted a combined $450 million loss in the September quarter, reported Economic Times.

(AW: Sruthi)

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