News
IndiGo posts fourth quarter and full-year loss
June 5th 2020
Indian LCC, IndiGo, will continue to accept new A320neos and retire older A320ceos with the goal of improving liquidity and lowering costs after its slump into the red from the COVID-19 outbreak. Read More »
The company this week reported a net loss of 8.7 billion rupees (US$115 million) for the fourth quarter of its fiscal 2020 financial year, compared with a net profit of 6 billion rupees in the prior corresponding period.
Revenue rose 5.3%, to 83 billion rupees, for the three months to March 31, 2020, IndiGo said in a regulatory filing.
"This is a very difficult time for the world economy in general and for the travel sector in particular," IndiGo CEO, Ronojoy Dutta, said during the airline's fourth quarter results presentation this week.
"The aviation sector has been through many ups and downs in its history but I think we can all agree this crisis is unprecedented in its impact."
India grounded all international and domestic flying in late March as the government brought in rules that restricted the movement of people to help slow the spread of the coronavirus. Domestic flights resumed on May 25.
In addition to the impact of the pandemic, the airline had "significant cost headwinds" due in particular to the depreciation of the Indian rupee, which fell 5.7% against the US dollar in the quarter.
Dutta said it was difficult to offer specific revenue guidance given the volatility and uncertainty in the market. The airline was in the process of revising its full-year capacity guidance, he said.
"We have planned a phased ramp up of operations to ensure we can enact on safety and social distancing norms and are, at the same time, able to cater to the available demand," Dutta said.
"We have sufficient aircraft, crew and other operating staff available to resume and scale-up operations rapidly."
IndiGo was operating at about 20% capacity and was keen to ramp up to 30% "quickly" as more states opened up to air services, Dutta said.
"There is a lot of pent-up demand. Since the lockdown lifted the revenue picture has been relatively strong."
The company reported a loss before tax of 12.9 billion rupees, compared with profit before tax of 6.3 billion rupees 12 months earlier.
IndiGo chief financial officer, Aditya Pande, said the airline was focused on managing its cash and liquidity at this time. Measures have included staff pay cuts, employee leave without pay, putting all discretionary expenses on hold, deferring some capital expenditure projects and discussions with suppliers on lowering prices and easing contract conditions.
Pande said the Delhi-based carrier would continue to take delivery of A320neo family aircraft to replace older A320ceo. "The ceos we are operating have higher ownership costs, driven by higher maintenance cost and higher fuel burn," he said.
"We are working on naturally retiring a number of these ceo aircraft. We will be taking the deliveries of new planes in quarter one and two of the current fiscal year, which are much more cost efficient. We are in discussions with manufacturers about deliveries beyond this period."
IndiGo had financed the majority of upcoming deliveries through operating lessors, which would help improve liquidity, he said.
IndiGo also has been in talks with lessors about freezing supplementary rentals to "better align these with our utilisation" for a period of nine months. No dividends would be paid this year to conserve liquidity. Pande said these measures would generate additional liquidity of approximately 30-40 billion rupees.
At the same time, the company was "looking to raise finance against the various unencumbered assets of IndiGo, which could be a source of additional liquidity", Pande said.
At March 31, 2020, the IndiGo fleet was 100 A320neo, 14 A321neo, 123 A320ceo and 25 ATR turboprops, according to a slide presentation accompanying the financial results.
For the full year, the airline posted a net loss of 2.3 billion rupees for the 12 months to March 31, 2020, compared with net profit of 1.6 billion rupees in the prior corresponding period.
Losses before tax widened to 2.6 billion rupees, from 1.5 billion rupees previously.
Written by Jordan Chong
