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Airline Financial Performance Analysis

After comparing the 2018-19 financial statements of Indigo and Spicejet airlines, the document concludes: - Both airlines saw declines in reserves and surplus, and increases in current liabilities and inventory. Indigo had higher current liabilities. - While revenue increased for both, Indigo's other income and expenses like employee benefits and depreciation grew more than Spicejet's. - Both airlines suffered losses, though Indigo's loss rate was smaller. - Indigo's ratios showed better liquidity and profitability compared to Spicejet. Overall, Indigo performed better financially despite challenges.

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Rohan Kashyap
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104 views1 page

Airline Financial Performance Analysis

After comparing the 2018-19 financial statements of Indigo and Spicejet airlines, the document concludes: - Both airlines saw declines in reserves and surplus, and increases in current liabilities and inventory. Indigo had higher current liabilities. - While revenue increased for both, Indigo's other income and expenses like employee benefits and depreciation grew more than Spicejet's. - Both airlines suffered losses, though Indigo's loss rate was smaller. - Indigo's ratios showed better liquidity and profitability compared to Spicejet. Overall, Indigo performed better financially despite challenges.

Uploaded by

Rohan Kashyap
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© © All Rights Reserved
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Conclusion:

After Comparing the Financial Statements of Both the Airlines we have concluded that they
both have not issued any sort of share capital in the FY 2018-19. Both has faced a decline in
their reserves and surplus. The long term borrowings of both the airlines has been reduced but
spicejet’s rate of reducing is more than indigo’s. Indigo has reduced its deferred tax liabilities,
whereas spicejet has no deferred tax liabilities. Current liabilities of both the companies has
been increased, indigo has got more current liabilities than spicejet. Indigo has seen an increase
in their fixed tangible asset whereas spicejet has seen a decline. Both the airlines has recovered
their loans and advances but spicejet has recovered more than indigo. Inventory is also
increased so as the debtors in both the companies. But indigo’s Cash and Cash Equivalent
Balance is increased by 30.78% whereas spicejet has seen a decline. Coming on to the Income
Statement is seen that the revenue from sales for both is increased from the last year i.e., 2017-
18. For Indigo, the Income from other sources is increased but spicejet has seen decline. It
seems that both has taken care of its employees more than 2017-18 as the employees benefit
expenses has also been increased. More in Indigo. The Finance Costs has also been increased
in both but indigo should minimise it. Depreciation and Amortisation Expenses of Indigo and
spicejet is increased. As we know their Non current Asset is also increased. Other Expenses
got increased by, more in indigo. Indigo and spicjet both Suffered a loss in the FY 2018-19 and
the profit has been fallen. Spicejet has seen more loss. Talking about the Ratio Analysis, we
have seen that Current Ratio of Indigo is better than Spicejet, they can repay their current
liabilities better than spicejet. Quick Ratio of Indigo is better than Spicejet, their liquidity
position is better than spicejet. Debt equity Ratio of Indigo is poor than Spicejet. Indigo relies
more on their equity. Proprietary Ratio of Indigo is slight better than Spicejet. Interest Coverage
Ratio is Indigo has fallen to a great extent whereas Spicejet’s ratio is better. Capital Gearing
Ratio is almost same for both the companies. Gross Profit Ratio of Indigo is positive and
negative in Spicejet. Net Profit Ratio of Indigo is lower than Spicejet and fallen to a great
extent. Operating Ratio of Indigo is better than Spicejet. Return on Investement in Indigo is
positive and negative in Spicejet. Return on Equity in Indigo is also positive and negative in
Spicejet.

Hence, it can be concluded that both the airlines are doing good in their business. At some point
Indigo is leading and at some Spicejet has an advantage. Spicejet needs to focus more to keep
their cash balance positive and indigo must try to decrease their current liabilities. They both
should try to increase their reserves and surplus. both are suffering from loss even though their
sales is increasing. The expenses of both the airlines should be minimised both operating and
non operating. Change must be brought in the operations and they should try to get work done
optimally. Altogether Indigo’s Ratio Analysis gets a lead. If we have to choose a winner among
these two companies we would certainly say that despite of all the criterias where indigo lacks
behind spicejet, It still managed to perform better than Spicejet and apparently it is clear from
the financial statements as well as both airlines are suffering from losses but the rate of loss in
Indigo is lesser.

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