IndiGo reports net loss of INR 1,064 crore in Q1

IndiGo narrowed its quarterly net loss on year as air travel demand increased and offset soaring costs of fuel. India’s biggest airline by market share posted a net loss of INR 1,064 crore in the April-June quarter compared to a loss of INR 3,174 crore a year earlier.

Its outgoing CEO Rono Dutta said the airline will continue to be in the red in July-September. But he expects it to return to profit in October-December.

IndiGo posted total revenue of INR 12,855 crore, a 375% increase on year. Its number of passengers rose 222%. But fuel costs for the quarter doubled to INR 5,990 crore.

IndiGo posted a net loss of INR 1,064 crore in the April-June quarter compared to a loss of INR 3,174 crore a year earlier.

IndiGo’s total income this Q1 was INR 13,018.8 crore, up 311% from INR 3,170.3 crore in the same quarter last year. However, total expenses also rose 122% from INR 6,344.4 crore in April-June 2021 to INR 14,083.1 crore this Q1.

IndiGo had a total cash balance of INR 19,069.4 crore comprising INR 8,303.7 crore of free cash and INR 10,765.7 million of restricted cash. The capitalised operating lease liability was INR 34,474 crore and the total debt (including capitalised operating lease liability) was INR 39,277.6 crore.

“Our revenue performance this quarter was impressive. We reported the highest ever revenue generated by the company and thereby produced profits at an operational level. However, cost pressures on fuel and foreign exchange prevented us from translating this strong revenue performance into net profitability. While our financial performance in the second quarter will be challenged by weak seasonality, the long-term revenue trend remains strong.”

Ronojoy Dutta, CEO, IndiGo

Capacity increased 145% YoY while passenger numbers climbed 221.9% for the quarter. Fuel prices rose 95.5% YoY. InterGlobe reported an EBITDAR of INR 716.90 crore with an EBITDAR margin of 5.6%. This is against a negative EBITDAR of INR 1360.20 crore with a negative EBITDAR margin of 45.2%.

India’s domestic travel demand spurted in the April-June quarter shaking off the woes of the pandemic. A fresh spike in infections has, however, crimped demand to an extent.

ALSO READ – IndiGo reports loss of INR 1,682 crore due to a surge in aircraft fuel expenses in Q4

IndiGo’s total income this Q1 was INR 13,018.8 crore, up 311% from INR 3,170.3 crore in the same quarter last year.

In a post-earnings conference call with analysts, he said the lean travel demand in September would “drag down” the July-September quarter, but he expected a “perfect storm” of profitability in the third quarter. This would happen with passenger load factors inching up and yields rising. IndiGo will restore all salaries to pre-Covid levels by November.

ALSO READ – 55% of IndiGo domestic flights delayed due to crew calling in sick; DGCA seeks explanation

The airline’s staff, including pilots, recently stayed away from work, protesting salaries. This led to considerable disruption in its flight schedules for at least one day. The airline industry in India is undergoing a churn.

The results come as IndiGo has seen a churn at the top, while reports of an exodus of its ground crew and technicians to other airlines have also been doing the rounds.

As of June 30, 2022, the airline had 281 aircraft in its fleet including 35 A320 CEOs, 146 A320 NEOs, 65 A321 NEOs and 35 ATRs

IndiGo expects a jump of about 70%-80% in capacity in available seats per kilometre in the current quarter from the same period a year earlier. Although demand has picked up, high fuel costs and inflation have emerged as big concerns for airlines.

As of June 30, 2022, the airline had 281 aircraft in its fleet including 35 A320 CEOs, 146 A320 NEOs, 65 A321 NEOs and 35 ATRs; a net increase of 6 aircraft during the quarter. It operated a peak of 1,667 daily flights during the quarter including non-scheduled flights.

During the quarter, the airline provided scheduled services to 73 domestic destinations and 20 international destinations with a technical dispatch reliability of 99.9% and an on-time performance of 85.5% at four key metros.

During the quarter, the airline provided scheduled services to 73 domestic destinations and 20 international destinations

Cash strapped carrier SpiceJet has faced the Indian regulator’s mandated cap on its flights after a spate of safety incidents. It also received deregistration notices on its leased aircraft from lessors on alleged defaults. New airline Akasa has started selling tickets and will start flying soon.

Jet Airways under new owners is waiting to start, while the Tata group wants to build a big aviation entity with Air India, Vistara and AirAsia India. Dutta said he doesn’t expect big disruptions in ticket pricing.

He said the airline has resumed operations to all international destinations barring China, Hong Kong and Myanmar. It plans to launch flights to Ras-al-Khaimah soon.

IndiGo CEO on the Indian airline industry

IndiGo’s outgoing CEO Ronojoy Dutta spoke about three major developments in the Indian airline industry at the moment — Tata’s mega plans for its four carriers, the shrinking of SpiceJet and Akasa taking to the skies.

“The competition is increasing, adding flights. But it’s quite small at this moment (Akasa). One of our major competitors has clearly reduced capacity a lot (SpiceJet) over the last year or two and that is helping us a lot. We do not see too much impact of the competition and if anything we see a healthy industry environment,” Dutta said in an earnings call on Wednesday.

Ronojoy Dutta, CEO, IndiGo

Asked if full-service Air India revived by Tatas and Vistara will take back the corporate business class passengers IndiGo got after Jet’s collapse in 2019, Dutta said –

“We are not head-to-head competitors. They (AI and Vistara) are very focussed on long haul international, not short haul, with a business class product. That’s not a market we serve. Therefore their domestic strategy is tied to that (aiming to) fill their wide bodies. We are not in the same ballpark. We are in the domestic market, small town and frankly (our) metro-to-metro is one of our weaker segments as that has too much capacity. Corporate demand is back but metro-to-metro is relatively weaker than metro to non-metro and non-metro to non-metro. We really are separated by customer, destination and network segments. They will do great catering to international network and competing with Lufthansa, Qatar Airways. We are not.”

Ronojoy Dutta, CEO, IndiGo

When IndiGo goes medium-haul international once the Airbus A321 XLRS start coming in from mid-2024, it will be going to places like Tel Aviv, Milan and the far east. IndiGo international operations are also back to the pre-Covid level.

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