In today’s Finshots we look at SpiceJet’s revival and if it’s built to last.

The Story

Running an airline is complicated. It costs a lot of money, competition is fierce and profits are hard to come by. That’s the reason why many airlines across the globe struggle to survive, and the story is no different in India. Just ask Jet Airways which collapsed in 2019, or Go First that shut down in 2023, and even the former national carrier - Air India - requiring a Tata Group bailout. In a market like this, survival is victory and a few players emerge unscathed.

And that brings us to SpiceJet.

For years it’s been seen as a losing bet ― a company constantly struggling to stay afloat, bogged down by financial troubles and dwindling market share. But now, it seems to be seeing the light at the end of the tunnel. In Q3FY25, the airline made a profit of ₹26 crores. That’s a big change from the ₹300 crores in losses it had in the same quarter last year.

So how did it pull this off, you ask?

Well, to understand this turnaround, we need to look at its past. And three things come in handy — its debt, fleet size and operational efficiency.

First, the debt. This has been SpiceJet’s biggest headache for a long time. 

In 2021, its liabilities hit ₹14,000 crores, and it was struggling to pay its bills. The pandemic made things worse, and at one point, the airline was defaulting on payments to aircraft lessors, who even took the company to insolvency courts. But SpiceJet knew it had to fix this mess if it wanted a shot at survival. So, in 2024 it raised ₹3,000 crores through a Qualified Institutional Placement (QIP). Out of this, about ₹2,300 crores was used to clear debts, pay off creditors and settle employee payments. On top of this QIP, the airline also renegotiated what it owed. It managed to settle ₹1,700 crores worth of aircraft and engine lessor disputes for just ₹1,200 crores, effectively saving ₹500 crores in the process. 

And all of this not only reduced its interest burden but also cleaned up its balance sheet.

Second, fleet expansion. 

You see, reducing debt wasn’t enough. SpiceJet also needed to expand its fleet. If it had too few planes, it would lose market share. Too many, and it would struggle with high costs. So it came up with a phased approach. For context, in 2019 the airline had 118 aircraft, but by 2024, it was down to just 39. And today, thanks to new funding, SpiceJet is rebuilding and it’s planning to have over 100 aircraft by 2026. Plus, the company is also negotiating for new planes and looking for ways to expand its reach. All of this signals an intent to claw back its market share.

And third, operational efficiency, which loosely tells us how well the airline runs its business.

One key metric here is to look at its Passenger Load Factor (PLF), which shows how full a carrier’s flights are. SpiceJet has consistently maintained a PLF of over 80%. In Q3FY25, PLF stood at 87%, continuing its trend from the last year when PLF remained at 92% (the highest in industry). Another important number here is the Revenue per Available Seat Kilometer (RASK), which stood at ₹4.57 per km in the latest quarter, and this has been witnessing a rising trend over the last few years.

So yeah, put all these things together and you’ll see why SpiceJet has managed to improve its unit economics and finally turn a profit. The company is hopeful about this growth too, with the management announcing, “The past is behind us”, even expecting strong revenue and double digit RASK growth in Q4FY25.

But the big question here is — Is this turnaround going to last?

To answer that you could first look at SpiceJet’s domestic market share, which is just 3.2% today ― far lower than its peak of 17% in 2014. Sure, it has improved from its lowest point of 2% in September 2024, but it still trails behind competitors. For context, IndiGo’s market share has grown to 65.2% in January from 64.4% in December, and so has Akasa Air’s at 4.7%.

Then there’s the issue of service quality. On-time performance (OTP) is a major factor for customers choosing any airline. In January 2025, IndiGo had the highest OTP at 75.5%, followed by Akasa Air at 71.5%, and Air India Group clocking 69.8%. As for SpiceJet, it ranked the lowest at just 54.8%, while also ranking poorly with its flight cancellations issues. It clocked the highest cancellation rate at 1.8% in 2024, compared to IndiGo’s 1.1%. And that’s not a great look.

Next comes investor skepticism. Right after SpiceJet reported its profit, its stock witnessed a drop. The reason? Some believe that the company isn’t fully transparent with its financial disclosures. And investors are questioning whether the reported turnaround is truly sustainable or if the company is simply propping up numbers with short-term fixes.

In fact, you could also look at this from another perspective. If you were to book a flight and had a choice between IndiGo, Vistara, Air India or SpiceJet, would you pick SpiceJet unless it was significantly cheaper? Probably not. And that’s exactly how investors might look at it too. A single profitable quarter doesn’t erase years of struggles. There are still too many moving parts, too much uncertainty and far stronger competitors in the market.

As Warren Buffett once said, “Price is what you pay, value is what you get.” 

Right now, the markets are correcting, and investors looking at the aviation space will likely lean toward better performing companies – with stability, dominance and a proven track record – rather than SpiceJet for value.

The airline has undeniably made progress. CEO Ajay Singh’s strategy is keeping it afloat, helping it restructure its finances and chart a path for growth it once could never have imagined. But to win over investors, it needs to deliver consistent results over multiple quarters.

So yeah, maybe SpiceJet’s turnaround is a promising start. But whether it’s truly built to last is a question only time will answer.

Until next time…

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