New Delhi: Amid flight cancellations, the cash-strapped SpiceJet could well get sucked into a swirling financial turbulence. The loss-making airline is teetering on the brink of a crisis, with a daily revenue loss of close to Rs 1.5-2.5 crore – a conservative estimate worked out by dna – due to cancelled flights. Its accumulated losses, as of March 31, 2014, stand at Rs 2,500 crore. Last quarter, its losses were Rs 310 crore.
The losses on flight cancellations can touch Rs 15-25 crore by November 30. The company has announced it will cancel 50 flights everyday till that date.
This revenue loss is computed on the basis of an average fare of Rs 3,000- 4,000 per passenger.
Considering that the airline is already grappling with a working capital problem, this depletion in revenue could hit its operations further and force it to cancel more flights, unless it is able to raise capital quickly.
However, its cost will not go down much since its fixed costs – staff, airport charges equipment, etc – remain the same. It will save fuel cost, which constitutes over 40% of an airline's operating cost.
25/11/14 Praveena Sharma/Daily News & Analysis
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The losses on flight cancellations can touch Rs 15-25 crore by November 30. The company has announced it will cancel 50 flights everyday till that date.
This revenue loss is computed on the basis of an average fare of Rs 3,000- 4,000 per passenger.
Considering that the airline is already grappling with a working capital problem, this depletion in revenue could hit its operations further and force it to cancel more flights, unless it is able to raise capital quickly.
However, its cost will not go down much since its fixed costs – staff, airport charges equipment, etc – remain the same. It will save fuel cost, which constitutes over 40% of an airline's operating cost.
25/11/14 Praveena Sharma/Daily News & Analysis
