Spicejet shares fall over 2% amid report of another technical glitch

During the day, the scrip was trading on a positive note during the morning deals having risen over 1 per cent, however, as soon as the story of the glitch broke in the afternoon, the stock erased its gains and tanked as much as 2.85 per cent on both the bourses during the intraday. (see graph below)

Source: BSE

Spicejet shares have witnessed a steep decline of over 30 per cent so far in this financial year 2022-23, having crashed 30.73 per cent from their March close of Rs 54.35 on BSE and 30.70 per cent from Rs 54.40 on NSE. On a year-to-date (YTD) basis, it has sunk 44.71 per cent on BSE and 44.68 per cent on NSE.

For Spicejet, this latest episode is at least the sixth air safety incident faced by it in the past two months. This past weekend, a Jabalpur-bound Spicejet flight made an emergency landing in Delhi on Saturday after smoke was noticed in the aircraft cabin.

Speaking to indianexpress.com, Ravi Singh, vice president and head of research at Share India Securities, said, “In the past 6 months, investors have lost nearly 50 per cent in Spicejet. Given the current scenario with high crude prices, it is not advisable to invest in any airline stock as the profitability of the sector will take at least a year.”

Explaining the situation of Spicejet, Singh said that the company has been incurring losses for quite some time now. “It incurred a loss of Rs 66.78 crore in quarter ended December 2020, it reported a loss of Rs 256.98 crore in March 2021 quarter, Rs 731.12 crore loss in June 2021 quarter, Rs 570.56 crore loss in September 2021 quarter and a PAT (profit after tax) of Rs 42.47 crore in December 2021 quarter.” He said that recovering from such steep losses will take a lot of time and the current scenario with high fuel prices makes the situation worse for the struggling budget airline.

He further added that with the presence of segment market leader IndiGo (InterGlobe Aviation) and the addition of a returning Jet Airways and new entrant Rakesh Jhunjhunwala-backed Akasa Air along with Tata-owned Air India, Air Asia and Vistara group, there is likely to be immense price wars to win customers which can also impact the earnings of the company.