Till FDI is
approved we cannot take it forward. The interest is from Gulf and South-East
Asia which will make the most sense. — Mr Neil Mills, CEO of SpiceJet
A day after
SpiceJet reported a loss of Rs 249 crore for the quarter ended March31, 2012,
the airline's Chief Executive Officer, Mr Neil Mills, spoke to Business Line
on a host of issues including what impacted the financials of the airline
Excerpts from
the interview:
What has been
the single largest contributor to an almost five-fold increase in losses?
There is
obviously the on going fuel cost. But the proportion of fuel cost in this
quarter is actually lower as compared to the last quarter. However, it is still
55 per cent of revenue even though that is better than the 64 per cent for the
full year.
The
depreciation in the Rupee must have hit you badly.
Unfortunately,
a lot of our costs are dollar denominated and the revenue is Rupee denominated.
So there is a natural imbalance. The weakening of the Rupee has had an impact
on our operating costs. However, since the quarter ended about two months ago
revenue has certainly improved from where it was.
How much has
the revenue increased?
About 10 per
cent.
Has this been
because of increase in fares?
Fares have had
to be increased in order to offset some of the increase in operating costs,
particularly on fuel. But this increase in fares has been supply and demand
driven. Unless oil and Rupee significantly strengthen, we will have no choice
but for this to continue. What we have been doing is to stabilise the fares at
the current level. That is where they are today (and not where they were at the
end of March) and are at least holding at that level going forward.
How long is
forward?
That depends on
how long fuel prices remain where they are.
Will importing
fuel directly as you plan make a difference to fare levels?
Ultimately it
will but not a huge proportion. We will have to see how successful the import
of fuel will be although we think it will be very successful. We are planning
the first physical import of fuel in the beginning of July.
What percentage
of the ATF uplift will be imported?
That really
depends on how successful the first import is. Let us see what we are going to
save. We are confident that it will become a large proportion of our total
fuel.
Where are you
going to import it from and who are your importers?
We have not
finalised that contract at this stage. It will take a few weeks. Getting
storage in India has been the biggest challenge. But we have pretty much got it
sorted out now.
Will imported
fuel be available at all stations?
First, we will
do it at a few target stations and then roll it through the network.
A full year net
loss of Rs 605 crore. How does it look going forward?
A: It looks
positive, that is why we continue to grow within India. We certainly believe in
the long term growth story.
Are you looking
to return some foreign pilots?
No, that is not
us. We are not looking at doing anything drastic. We will do things in an
orderly and controlled way.
What does
controlled way mean?
We have
renegotiated a couple of our contracts for about Rs 20 crore of our current
costs. It is a one-off cost where we are trying to get a better cost base going
forward. We have also signed a long term engine agreement.
Is there
investor interest in the airline?
We have been
talking to a lot of potential investors. SpiceJet has a lot of interest from
third party investors who are mostly international.
Have any
airlines shown an interest in SpiceJet?
They have shown
a speculative interest. But till FDI is approved we cannot take it forward. The
interest is from Gulf and South-East Asia which will make the most sense.
Are you looking
to add to your fleet during the year?
We added
another aircraft last night. We will finalise how many we intend to take in
during the year in a couple of weeks. Six to seven aircraft will probably be
added this year.
Any date for
starting new international destinations for which the Government has given
permission?
A: As soon as
we get permission from foreign countries. It took 15 months to receive
permission from India so we need to give foreign countries a little bit of time
to do their bit.
Will you look
to add more city pairs within the country?
We are
continuously growing. We have grown by 10 new airports in the last 12months.
The Budget
opened the ECB window. Will you tap into that?
ECB is
something that we will look at but it is not particularly attractive at this
point in time. How can you borrow in dollars with the Rupee being as volatile
as it is?
What has been
the impact of Delhi airport raising its charges?
A: We will try
and pass as much as possible to the customer but it will make us relook at how
many aircraft we base in Delhi. Currently, there are 11 machines in Delhi. We
have not taken a decision on where we will base the aircraft.
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