IndiGo reports fourth straight quarterly loss at ₹620.14 crore
The airline’s net losses, however, narrowed to ₹620.14 crore during the December quarter, as compared to a loss of ₹1,194.83 crore in the September quarter. IndiGo had reported a profit of ₹495.97 crore during the December quarter of the previous year.
During the December quarter, IndiGo’s revenue fell by 50.2% to ₹5,142.78 crore. A Bloomberg survey of six brokerages had expected the company to report a loss of ₹334.20 crore on a revenue of ₹5,028.20 crore.
The airline’s expenses fell by 41% to ₹5,765.90 crore during the December quarter. Expenses however exceeded revenue during the period.
(Passenger) demand fell during the second half of December, due to the news of the spread of a new variant of coronavirus (from UK), though it bounced back during the second week of January, said the airline’s chief executive Rono Dutta, during a post result analyst call.
“Clearly we want aircraft utilization to be higher. We are confident that revenue will increase with capacity (increment). But, we are not getting an eight week booking period,” Dutta said, indicating that most passengers are still booking close to their travel dates, which is contributing to lower fares.
Dutta said that he hoped to operate at 100% of pre-covid domestic capacity by April, and 100% of pre-covid international capacity by December 2021.
Revenue from business and corporate travelers, which constituted for about 22% of IndiGo’s topline, and subsequently fell as low as 8% during the pandemic, is expected to settle down to 15%-16% of revenue in the coming months, Dutta added.
As things stand, Indian airlines are currently allowed to operate 80% of their pre-covid capacity. IndiGo operated at 70% of its pre-covid capacity during the December quarter, which included about 60% of domestic capacity and 28% of international capacity, as compared to the same period of the previous year. On the international front, flights to countries under bilateral air bubble agreement are allowed to operate.
“Our strategy is simple. Get domestic up 100% capacity as soon as possible. There is lots of room for growth in tier two and three cities. Places like Srinagar, Patna, Varanasi, and Chandigarh (among others) are doing well,” Dutta said.
“On the international front…open up international gradually in a measured way. Hold revenue flat while adding capacity, then gradually see a rise in revenue. We are confident in being on the right track,” Dutta said adding that he expects international flights to neighbouring countries like Sri Lanka, Bangladesh and Saudi Arabia to open up in the next six to eight weeks.
During the December quarter, IndiGo has managed to bring down its daily cash burn to ₹15 crore, from ₹25 crore during the September quarter. The airline also saw its cargo revenue increase by 38.5% during the December quarter, on an annual basis, chief financial officer Aditya Pande said.
“There are several financing options (before us). The ongoing deliveries of neo aircraft (A320neo/A321neo) in FY 22 will bring further liquidity,” Pande said adding that IndiGo will not raise funds through qualified institutional placement (QIP) route.
IndiGo is one of the pioneers of sale and lease back (SLB) transactions in Indian aviation industry, a feat which has helped the airline report profit consistently during its earlier years.
A sale and leaseback is a transaction in which the owner sells the aircraft, and then takes it back on lease from the buyer. This kind of deal typically removes the aircraft, and its associated debt, from the carrier’s balance sheet.
At the end of the December quarter, IndiGo had ₹18,365.3 crore cash, including free cash of ₹10,920.7 crore. The total debt of the airline stood at ₹27,726.10 crore during the same period.