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India’s IndiGo encouraged by response to restart
July 31st 2020
IndiGo CEO, Ronojoy Dutta, said this week there had been encouraging signs for the LCC since it resumed scheduled passenger flights in late May. Read More »
The Indian carrier stopped scheduled flights between March 25 to May 24 in response to restriction of movement rules imposed by the Indian government due to COVID-19. Charter and cargo flights were exempted.
While flight operations have resumed, Dutta said IndiGo was at 25% capacity levels by the end of June compared with pre-pandemic levels..
Dutta said unit revenue had been "reasonably strong although at very low capacity levels" since the restart. Yields were up 11.1% in the three months to June compared with a year earlier. Average load factor was about 60% for June, peaking around 70%.
"On the flights we operated, we remained significantly contribution positive, which has helped us offset part of our fixed costs," Dutta said during IndiGo's second quarter results conference call this week. It is aiming for capacity at 40% of pre-COVID-19 levels in the second quarter of its fiscal 2021 year, rising to about 60%-70% by the third quarter.
IndiGo chief financial officer, Aditya Pande, said the external environment was highly volatile.
"Therefore, our planning horizons are short. We are continuously making course corrections as we navigate through this uncertainty," he said.
On current bookings, Pande said while most of July had been strong, there had been some weakening trends in the past few days. "We attribute this weakening to the spike in COVID-19 cases, the sporadic lockdowns in various states and the seasonality in demand," Pande said.
InterGlobe Aviation Ltd, the parent company of IndiGo, reported a net loss of 28.4 billion rupees (US$380 million) for the three months to June 30, 2020, a deterioration from a net profit of 12 billion rupees in the 2019 corresponding period. Revenue from operations declined 91.9%, to 7.667 billion rupees, InterGlobe said in a regulatory filing to the Bombay Stock Exchange (BSE).
IndiGo was working to reduce fixed costs and strengthening its liquidity.
Pande said the company's fixed cash burn had fallen from about 400 million rupees a day in March to about 300 million rupees daily by June "because of the various cost reduction initiatives and cash contribution from our limited operations".
In other Indian airline news, LCC, SpiceJet, this week disclosed a net loss of 9.3 billion rupees (US$125 million) for the 12 months to March 31, 2020 compared with a net loss of 3.2 billlion rupees a year earlier. The company said the net result included a non‐cash loss of 6.97 billion rupees due to foreign exchange losses on a restatement of lease liabilities from changes in accounting rules.
SpiceJet chairman and managing director, Ajay Singh, said the past financial year posed many challenges for the airline, and added the Indian and global aviation industry were "going through the toughest ever phase" in history.
"Two key factors that adversely impacted our performance and bottom line was the COVID‐19 pandemic that started affecting demand adversely from mid‐February and the grounding of the 737 MAX, which has been out of service for over a year now," Singh said in a statement.
"Despite the year-long grounding of the MAX, SpiceJet ran a profitable operation till the virus hit demand from mid‐February."
Jet Airways, which is proceeding through a corporate insolvency resolution process and has not flown since April 2019, released its financial accounts for the 12 months to March 31, 2019 this week.
The report showed the airline recorded a net loss of 55.4 billion rupees (US$741 million) for its full fiscal 2019 year, compared with a net loss of 7.7 billion rupees in the prior year. At March 31, 2019, Jet Airways had assets of 111.1 billion rupees and total liabilities of 238 billion rupees, the accounts said. The company's net worth was negative 127 billion rupees.
