SpiceJet Q3 Results: Revenue Soars 77%, But Auditor Flags 'Going Concern' Risk

Introduction

SpiceJet Limited has announced its unaudited financial results for the third quarter of fiscal year 2026, revealing a significant operational turnaround. The airline reported a substantial increase in revenue and a sharp reduction in net loss compared to the previous quarter. However, these operational gains are overshadowed by a critical warning from its auditors, who have expressed material uncertainty about the company's ability to continue as a 'going concern', casting a shadow over its long-term viability.

Strong Operational Performance in Q3

For the quarter ending December 31, 2025, SpiceJet's revenue from operations surged by a remarkable 77% quarter-on-quarter (QoQ), reaching INR 1,384 crore from INR 781 crore in Q2 FY26. This growth was driven by a 56% increase in Available Seat Kilometers (ASKMs) as the airline expanded its capacity by adding 16 aircraft. The expansion helped boost its domestic market share to 4.3% in December 2025, up from 1.9% in September 2025. The airline also maintained a high Passenger Load Factor (PLF) of 90%, indicating strong demand and efficient capacity utilization. Furthermore, Passenger Revenue per Available Seat Kilometer (RASK) improved to INR 4.74.

Narrowing Losses and Improved Profitability

The airline made significant strides in curbing its losses. The consolidated net loss for Q3 FY26 narrowed by 58% QoQ to INR 268 crore, a substantial improvement from the INR 635 crore loss reported in the preceding quarter. A key indicator of operational health, EBITDAR (Earnings Before Interest, Taxes, Depreciation, Amortization, and Rent), turned positive. It improved from a negative INR 392 crore in Q2 FY26 to a positive INR 175 crore in Q3 FY26, signaling better operational profitability before accounting for lease and interest expenses.

Auditor's Qualified Conclusion Raises Alarm

Despite the positive operational metrics, the auditor's report has raised serious concerns about SpiceJet's financial foundation. The auditors issued a 'Qualified Conclusion', highlighting a 'material uncertainty related to the company's ability to continue as a going concern'. This warning stems from the airline's severe financial distress, including massive accumulated losses and a state of negative working capital where current liabilities significantly exceed current assets. As of the quarter's end, consolidated accumulated losses stood at a staggering INR 8,952.39 crore. The auditors also pointed to non-compliance with various laws and regulations, further complicating the financial picture.

Key Financial Metrics Summary

Management's Strategy and Outlook

In response to the financial challenges, SpiceJet's management has expressed confidence in its turnaround strategy. The company plans to ramp up its fleet to 55-60 aircraft for the winter schedule to capitalize on demand. To improve liquidity, the management is focused on monetizing surplus assets. A recent step in this direction was an equity allotment that settled liabilities worth INR 476 crore. The management believes these measures, combined with future business plans and cash flow projections, will be sufficient to sustain operations.

Persistent Headwinds and Financial Risks

The airline continues to face several external and internal challenges. Expenses in the quarter were impacted by the costs associated with its grounded fleet, volatile Aviation Turbine Fuel (ATF) prices, and depreciation of the Indian Rupee. An exceptional item of INR 19.81 crore was also recognized due to the financial impact of new Labour Codes. For investors, the primary risk remains the 'going concern' qualification, which directly questions the airline's medium-term survival. The persistent negative working capital and accumulated losses necessitate substantial and continuous funding to maintain operations.

Conclusion

SpiceJet finds itself at a critical crossroads. While its Q3 FY26 results demonstrate a commendable operational recovery with strong revenue growth and reduced losses, the grave financial warnings from its auditors cannot be ignored. The airline's future now hinges on its ability to successfully execute its strategy of securing new funding, resolving its deep-seated balance sheet issues, and ultimately satisfying auditor concerns. The upcoming quarters will be pivotal in determining whether SpiceJet's operational flight path can overcome its severe financial turbulence.