By Nuvama research
SpiceJet’s (SJ) reported a positive EBITDAR of Rs 5.9bn as demand increased during the festive season. The return of aircraft and a waiver on lease rental also contributed to the growth of EBITDAR.
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SJ reported the highest PLF of 91% among peers. Yields surged 17% y-o-y to Rs 5.2 in Q3FY23 led by capacity additions, festive demand and new routes. PAT turned positive to Rs 1bn, attributable to Rs 5bn of other income as SJ returned certain non-operating aircraft and negotiated waiver on lease rentals. As per reports, Carlyle Aviation, its biggest lessor, agreed to convert its $100mn o/s lease rental into a 5% equity stake – should considerably deleverage SJ’s balance sheet. We anticipate yields to moderate as pent up demand fades, however may remain healthy. The addition of the 737-8 MAX aircrafts will likely help buttress growth – higher capacity and better fuel efficiency.
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SpiceXpress Rev/EBITDAR declined 42%/69% to Rs 1.2bn/ 250mn as cargo loads declined 37% to 17k tonnes. However, SJ aims to hive-off its cargo segment and plans to deploy additional freighter aircraft by end-FY23 in-order to expand its cargo business. Given the lack of transparency for investors, transfer of the cargo business, replacement of cheap Boeing planes and weak balance sheet, we cut FY23E/24E EBITDAR by 6%/ 9%.