IndiGo reports net loss of Rs 3,174.17 crore in Q1, highest ever

The airline’s cash daily cash burn increased from Rs 19 crore in March quarter to Rs 33.4 crore during June quarter
India’s largest airline IndiGo posted its highest ever quarterly loss of Rs 3,174.17 crore loss during the April-June period as the second wave of the pandemic during April and May forced down the number of air passengers. IndiGo CEO Rono Dutta described the period as one of the most difficult periods in the company’s history but said that with the spread of the virus declining every day, there has been a return of passengers to aircraft and that the airline sees no reason to slow down capacity addition.

“I will have to say in an emphatic way that yes Covid is a big crisis, but it is a short term crisis and the longer term story is the India story remains strong. So when we look at that, we tell ourselves that let’s run a good airline and the longer term story is a table thumping great story,” Dutta said.

However, he warned that a new wave of the virus can upend the recovery seen. “We will see gradual recovery for the next three quarters and hope to be back to the pre-Covid capacity by the end of this year,” Dutta said adding that forward bookings have seen a slight improvement.

Adding to this, the airline’s condition was worsened by crude oil prices have inched up, which means operating costs increase for airlines. For perspective: average aviation turbine fuel (ATF) prices in Q1FY22 increased by around 97 percent year-on-year and 12 percent against the March quarter. The airline’s fuel cost jumped 854 per cent year-on-year to Rs 1,216 crore in the quarter.

The impact of the second wave can be gauged from the following numbers- While in April the airline generated Rs 1540 crore of cash, it depleted more than half to Rs 670 crore and in June it increased slightly again to Rs 970 crore. “We are expecting that in July it will be similar to that in April,” Dutta said.

A prolonged impact of the coronavirus has turned IndiGo’s net worth to negative- the first time in company’s history, but Dutta said that it will not impact the company’s negotiating power with lenders, lessors or aircraft lessors. “The relationship between IndiGo and vendors is very solid. If anything, IndiGo has become a blue chip as they see what’s happening elsewhere and then they compare it with IndiGo which has not allowed to build up any kind of pending payment

The airline’s cash daily cash burn increased from Rs 19 crore in March quarter to Rs 33.4 crore during June quarter.

The impact of the ongoing limitation on operations of the company were felt in the balance sheet with free cash declining 25 per cent on-year, while total debt soared nearly 35 per cent.

The airline raised liquidity of Rs 1,000 crore during the June quarter. “We will be focusing on countering the situation through cost reduction, liquidity enhancement and capacity addition,” said Jiten Chopra, CFO of IndiGo.

Analysts tracking the company were eager to know if work from home will permanently shave off some corporate travellers. Sanjay Kumar, chief strategy and revenue officer said that it will largely recover. “Pre-covid corporate used to be 20 percent of our business. So it may not get there but it will hold around 13-14 percent,” he said.

While the airline had seen almost 50 percent of business travel back in February, the gains were washed away due to the second wave. “What we are witnessing is industries like manufacturing, infrastructure, pharma, banking are seeing better recovery in terms of corporate travel as compared to IT, consulting services. " What we are hoping that as the infection has gone down, corporate travellers will be back,” he said.

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