Financial Analysis (Spicejet Airlines

BY: PGP 1,Section:D,Group: 12


Arpan Bhagat PGP27207 Brijesh Kumar Prakhar Singh

helps the company amortize the fixed costs of setting up bases at airports over a larger number of seats .SpiceJet has been very effective in utilizing its assets Low average inventory days .Swot Analysis Strength:  Distinction of one of the first Low Cost Carriers in the country  Focus on route optimizations and productivity improvements to      mitigate the effects of constraints in pricing Strong backing by its promoters who have not flinched even in the most crucial of times ‘Fixed capital/ sales’ ratio lower than the industry average .reduces the inventory cost and enhances its profitability and performance. and maximizes frequencies between them . Tie-up with KLM Royal Dutch airlines for maintenance support technical expertise helps reduce cost Spice Jet focuses on a few destinations.

great problem in the market expansion • Focus on cost efficiency – reduced expenditure on marketing as well has increase of assets.Weaknesses: • Failure in establishing a strong brand image in the minds of the people • low product innovation and differentiation • Operates only in some of the geographical regions in the country focuses mainly on north-west-south Indian market • Small fleet size compared to its rivals . Opportunities: • Continuous increase in demand in the Indian aviation industry • Opportunity to enhancing domestic connectivity between Tier-II and TierIII cities • Economic projections -India will have sustained economic growth further fuelling a spurt in the middle class population • Secondary and Tertiary markets expected to lead the growth .

including Spicejet.a fragile company might become strong (major bailout from Government) .relatively strong and competitive company might experience a sudden fall in revenues and profitability • Short-term trend can be predicted but assessment of long term trend is very difficult .Threats: • Runaway rise in price of crude oil • Intense competition in the Indian skies .inability of all carriers.unpredictability and fragility of companies in the industry makes future planning for a competing company uncertain and difficult . to increase fares • High labour costs in the industry + high attrition rate Various risks and caveats within the SWOT analysis : • Government policies itself very venerable and cannot be predicted • The unpredictable economic condition of the world affects the buying power of the consumer • Prediction of woes for a company is very difficult .

Competencies of SpiceJet Competencies Core Competencies Distinctive Competencies Operational excellance – Tie up with KLM Customer Service On-time Delivery .

SpiceJet Value Chain Technolo gy Develop ment • Different class of aircrafts HR & Training • Flight Staff Recruitm ent • Pilots Recruitin g Procure ment • aircraft s from Boeing and Bomba rdier Inbound Logistics • Route Planning • Fuel Procure ment • Fleet procure ments • and other materials procure ment Operation s • Fleet maintena nce • Freight maintena nce • Baggage control • Ticket reservati ons • Flight informati on Outbound Logistics • Passeng er handling • Outboun d baggage control • Freight and ticket providing services • Custome r services Marketing & Sales • Promotio ns. Offers • Internet booking • Scrappin g of agents • Online check-in facility Service s • Single s class • Tieups with hotels .

Operating Parameter .

 Proposal of the Group of Ministers (GoM) to allow domestic Indian carriers to directly import ATF is certainly a welcome development. The total promoter funding in the airline would be around Rs 230 crore in the current fiscal year  Aversion by banks to lend to airline companies it shouldn’t go ahead with buying of new fleet of 11 flight from bombardier.Future Prospects and Budget Wishlist  Kalanithi Maran is pumping Rs 100 crore into the budget airline Spice Jet through a preferential offer of shares. But lack of expertise of players will negate the benefit from sales tax  Allowing FDI up to 29% as per DIPP cabinet note into the .

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