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

Introduction: A Tale of Two Realities

SpiceJet Limited has announced its unaudited financial results for the third quarter ending December 31, 2025, presenting a narrative of sharp operational recovery juxtaposed with severe financial distress. While the airline posted a remarkable 77% sequential jump in revenue and significantly narrowed its net loss, these achievements were heavily clouded by a 'Qualified Conclusion' from its auditors, who raised material uncertainty about the company's ability to continue as a 'going concern'. This duality places the airline at a critical crossroads, where improved performance battles against deep-seated financial vulnerabilities.

Strong Operational Performance in Q3

On the operational front, SpiceJet demonstrated significant momentum. The company's revenue from operations surged to ₹1,384 crore in Q3 FY26, a 77% increase from the ₹781 crore reported in the preceding quarter (Q2 FY26). This growth was driven by a 56% increase in Available Seat Kilometers (ASKMs) as the airline expanded its capacity, leading to a rise in its domestic market share to 4.3% in December 2025. The airline maintained a high Passenger Load Factor (PLF) of 90%, indicating strong demand and efficient capacity utilization. Furthermore, the Passenger Revenue per Available Seat Kilometer (RASK), a key industry metric, improved to ₹4.74.

Profitability Metrics Show Improvement

The improved revenue performance translated directly to the bottom line. SpiceJet's consolidated net loss for the quarter reduced by 58%, coming in at ₹268 crore compared to a loss of ₹635 crore in Q2 FY26. A crucial indicator of core operational health, EBITDAR (Earnings Before Interest, Taxes, Depreciation, Amortization, and Rent), turned positive. The airline reported an EBITDAR of ₹175 crore, a substantial recovery from the negative EBITDAR of ₹(392) crore in the previous quarter. This shift highlights better profitability from core airline operations before accounting for lease and interest expenses.

The Auditor's Grave Warning

Despite the positive operational figures, the auditor's report cast a long shadow over the results. The auditors issued a 'Qualified Conclusion', signaling that they could not give the financial statements a clean bill of health. The most alarming point raised was the 'material uncertainty related to going concern'. This is a formal declaration that significant doubt exists about the airline's ability to continue its operations for the foreseeable future without substantial changes or support.

Unpacking the Financial Strain

The auditor's concerns are rooted in SpiceJet's precarious financial position. The company is burdened with massive accumulated losses, which stood at ₹89,053.73 million on a standalone basis and ₹89,523.87 million on a consolidated basis. These losses have completely eroded the company's net worth. Additionally, the airline is operating with significant negative working capital, where its current liabilities far exceed its current assets. This situation creates immense pressure on liquidity and the ability to meet short-term obligations.

Exceptional Items and External Pressures

Adding to the complexity, the financial results were impacted by several other factors. The company recognized an exceptional item charge of ₹198.08 million due to the financial implications of new Labour Codes. A significant foreign exchange loss also weighed on the results, a common challenge for airlines that have costs denominated in foreign currencies. These items, combined with the high cost of aviation turbine fuel (ATF) and expenses related to its grounded fleet, continue to exert pressure on the airline's finances.

Management's Strategy for Survival

In response to these challenges, SpiceJet's management has expressed confidence in its turnaround strategy. The company is actively working on a calibrated fleet ramp-up, aiming to have 55-60 aircraft operational for the winter schedule to capitalize on seasonal demand. To address the severe liquidity crunch, management is pursuing plans for asset monetisation, including the sale of surplus spares. In a recent move to clean up its balance sheet, the airline completed an equity allotment to settle liabilities worth ₹476 crore, converting debt into equity.

A Persistent Pattern of Risk

For investors and industry observers, the auditor's warnings are not new. SpiceJet has faced scrutiny over its financial health and regulatory compliance for several quarters. Past reports have highlighted issues such as delays in depositing statutory dues like TDS and GST, as well as ongoing litigation with former promoters, which represents a potential financial liability. This history of persistent financial stress and compliance issues underscores the depth of the challenges the airline faces.

Conclusion: A Critical Juncture for SpiceJet

SpiceJet's Q3 FY26 results paint a picture of an airline fighting a battle on two fronts. While its operational team has delivered a commendable performance, its financial foundation remains critically weak. The significant improvement in revenue and reduction in losses provide a glimmer of hope, but the auditor's 'going concern' warning cannot be ignored. The success of management's plans to expand the fleet and improve liquidity will be pivotal. The upcoming quarters will determine whether SpiceJet can translate its operational recovery into sustainable financial stability or if its deep-seated financial vulnerabilities will prove insurmountable.