Mint Explainer: Why SpiceJet repeatedly delays earnings announcements and how it pays the price

SpiceJet, which has not announced its earnings for the past six months, is set to finally publish the results for the quarters ended December and March next week. Mint delves deeper into the issue and explains the impact of this long hiatus for the low-fare airline.

Deferred earnings

This is not the first time that SpiceJet has not filed its financial statements with the stock exchanges within the period specified by the regulator. It has deferred reporting its earnings at least thrice in the recent past.

The company delayed posting its earnings for Q4 of FY22 after an attack on its IT systems, which affected the audit process, forcing the release of the quarterly earnings to be postponed. The company then announced the results for the January-March quarter of FY22 and the April-June quarter of FY23 together in September 2022.

The following year, the airline deferred its earnings announcement for January-March of FY23 due to “ongoing medical incapacitation of a key member of its audit committee.” It then also deferred the earnings announcement for April-June of FY24 and finally filed the earnings for both these quarters in August 2023.

Also Read: For SpiceJet to stay afloat, some crew will have to deplane

The company has not published any earnings since declaring the results for the July-September quarter of FY24, when it reported that its consolidated net loss narrowed to ₹449 crore from ₹830 crore in the year-ago period.

SpiceJet informed the stock exchanges on Tuesday it will post the earnings for Q3 and Q4 of FY24 on 15 July. The airline has not disclosed the reasons for the delay.

Sebi norms

Delaying the filing of results is not without consequences. As per the market regulator, a listed company must provide adequate and timely information to the stock exchanges and investors.

According to the norms prescribed by the Securities and Exchange Board of India, the periodic filings, reports, statements, documents and information reports should contain information that allows investors to track the performance of a listed entity over regular intervals and provides them sufficient information to help assess its current status.

A listed company must submit its quarterly and year-to-date standalone financial results to the stock exchanges within 45 days of the end of each quarter, failing which it can be subjected to a penalty. SpiceJet has paid penalties in the past due to non-compliance with the SEBI (Listing Obligations and Disclosure Obligations) Regulations, 2015.

According to SpiceJet’s annual report for FY23, it paid a penalty of ₹5,900 for a one-day delay in filing the unaudited financial results for the quarter ended December 31, 2021, and ₹59,000 for a 10-day delay in submitting the unaudited financial results for the quarter ended December 31, 2022.

It was fined ₹271,400 by Sebi for a delay of 93 days in submission of audited financial results for the year ended March 31, 2022, and was asked to pay ₹88,500 for a 16-day delay in submission of unaudited financial results for the quarter ended June 30, 2022.

Current challenges

SpiceJet has been embroiled in legal battles over unpaid dues to aircraft lessors, vendors and suppliers, and faces contempt notices from the Delhi high court and the National Company Law Tribunal.

Also Read: Delhi HC begins contempt case against SpiceJet for not returning TWC’s assets

The airline’s market share has shrunk rapidly over the past five years - to 4% of the domestic aviation market in May 2024 from 5.4% in May 2023 and 14.8% in May 2019.

“If a company is not declaring results on time, it is going to have a major impact on investor sentiment. Good or bad, a company has to disclose results on time,” said Kranthi Bathini, an equity strategist at WealthMills Securities Pvt Ltd.

Bathini added that aviation as a sector has been doing extremely well, tourism is growing, and crude oil prices have been a bit stable.

“There has been a positive sentiment for SpiceJet with respect to the recent fund infusion and QIP, so it remains to be seen how SpiceJet has performed over the last two quarters,” Bathini said.

In December 2022, the SpiceJet board approved raising ₹2,250 crore from 64 entities, including financial institutions, foreign institutional investors, high-net-worth individuals, and private investors through the issuance of equity shares and warrants. In February 2024, the airline said it secured additional funding of ₹316 crore, bringing the total raised through its preferential issue to ₹1,060 crore.

Early this year, the airline laid off about 1,500 employees, or about 15% of its staff, following a two-thirds reduction in its fleet size, for want of funds. The airline expects to save about ₹100 crore per year from these measures.

Elara Securities had earlier estimated the airline's revenue at ₹1,876.8 crore and an adjusted net profit of ₹275.1 crore. The company registered total income of ₹2,499 crore in the same period a year ago and a consolidated net loss of ₹6.2 crore.