IndiGo Revenue Plunges by 65%

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IndiGo aircraft - Aviatorsbuzz
An IndiGo aircraft in the sky

InterGlobe Aviation Ltd, parent company of India’s largest budget airline IndiGo, on Thursday announced its Q2 results that showed loss widen to Rs. 1,194.8 crore and revenue plunge 65 percent.

The airline however managed to arrest the loss on the back of making gains of Rs 513 crore on forex, smart capacity utilisation, a lower wage bill that saw IndiGo spend Rs 467 crore lower on salaries and a stellar performance of its cargo team.

During an analysts call, chief executive Ronojoy Dutta said, “We are currently operating at about 58 percent of our total capacity though the government, at present, allows airlines to deploy upto 60 percent of their total capacity. This is due to restrictions of flights in cities like Kolkata, Mumbai and Chennai.”

Mr. Dutta informed that IndiGo expected to operate at about 80 percent capacity by the end of the year (calendar year) and at about 100 percent by April-May 2021. “This would however depend on the government removing capacity restrictions. Our focus will be on aggressively increasing its domestic capacity,” he said.

The CEO said he expects restrictions on international flights to be lifted gradually from November. “During September 2020, we are operating 20 percent of international flights that we operated during September 2019,” he said.

International flights operated by IndiGo were mostly charter flights, repatriation flights, apart from flights under the air bubble agreements with various countries as scheduled international commercial flight operations remain grounded at least till November-end.

“Our international aspirations are high but on a narrow body range. We have looked at wide body options, but until the numbers work for us, we will not go for it,” Mr. Dutta revealed.

Sanjay Kumar, IndiGo’s chief strategy and revenue officer, informed passenger traffic between metro and tier one cities was gradually returning following the easing of lockdown and opening up of cities.

IndiGo also plans to monetise about ₹3,000 crore over the next few months, the airline’s chief financial officer Aditya Pande said. This would be done through the sale and lease back of 7 ATR aircraft, reworking of contracts with vendors, and raising about ₹600 crore from banks.

Mr. Pande informed that IndiGo’s daily cash burn stood at ₹25 crore during the September quarter. At the end of September, IndiGo had a total cash balance of ₹17,931.8 crore. This included ₹6,973.4 crore of free cash and ₹10,958.4 crore of restricted cash.

The airline’s net debt stood at ₹25,419.4 crore on 30 September, up 28.1% from the year-ago period.