Fuelled by robust market demand and higher revenues, InterGlobe Aviation on Thursday flew into the profitability zone, raking in a net profit of Rs 919.2 crore in the March quarter.
The parent of the country’s largest airline IndiGo, which had faced turbulence last year, had a net loss of Rs 1,681.8 crore in the three months ended March 2022.
Reflecting the bullishness in the aviation market, the carrier has forecast a 5-7 per cent rise in Available Seat Kilometres (ASK), an indicator of seat capacity, in the June quarter.
IndiGo said it is adding 5,000 more people to its workforce and looking to add 45-50 aircraft this fiscal and that it continues to deal with supply-chain issues and work on mitigating measures.
The airline has reported its “best-ever fourth-quarter net profit of Rs 9,192 million for the quarter ended March 2023”. Excluding the foreign exchange gain of Rs 252.8 crore, the net profit aggregated to Rs 666.4 crore, according to a release.
The total income surged nearly 78 per cent to Rs 14,600.1 crore in the fourth quarter of the last fiscal. In the same period a year ago, the total income was Rs 8,207.5 crore.
“For the quarter, our passenger ticket revenues were Rs 124,346 million, an increase of 80.6 per cent and ancillary revenues were Rs 14,459 million, an increase of 36.6 per cent compared to the same period last year,” the release said.
IndiGo CEO Pieter Elbers said that with a combination of robust market demand and focused execution of its strategy, the March quarter was the second consecutive quarter wherein the airline produced strong operational and financial results.
“For the year ended March 2023, IndiGo reported a profit of Rs 26,540 million, excluding foreign exchange impact. Including foreign exchange impact, IndiGo reported a net loss of Rs 3,058 million for the year.
“The profits of the third and the fourth quarters largely compensated for the losses incurred in the first and the second quarters,” the carrier said.
“We flew around 86 million passengers in the previous fiscal and we now expect to fly 100 million passengers this fiscal…To support this growth, we are investing in multiple areas. We are hiring around 5,000 employees, IndiGo Chief Financial Officer Gaurav Negi said at a post-earnings analysts call on Thursday.
Stating that the airline is working closely with its OEM to ensure that it has adequate support (on the engine supply issue), Elbers said, “We are watching the situation closely going forward”.
He said that a part of the airline’s aircraft fleet is being powered by Pratt &Whitney engines while the new aircraft are coming in with CFM LEAP engines.
That automatically changes the ratio (between P&W engines and Leap engines), going forward, he said, adding that the company is “closely working” with Pratt & Whitney to make sure that the supply-chain issues are addressed.
“We will continue to develop the domestic network and unparalleled connectivity to serve every city. Another important part of our future is internationalisation. We are adding more routes and more frequencies,” Elbers said.
“Going forward, we will further strengthen our international presence in Central and Southeast Asia and the Middle-east by adding more routes and destinations,” he added.
He said that the airline’s network expansion plans are being well supported by its pending order book of around 500 aircraft.
The demand remains robust, and forward bookings are very encouraging, he said, adding that IndiGo “structurally” is one of the strongest players.
“We are looking forward to the next fiscal year with great enthusiasm as we aspire to grow north of mid-teens building on our ambitious expansion plans,” Elbers said.
At the end of March, IndiGo’s total cash balance stood at Rs 23,424.3 crore, comprising Rs 12,194.8 crore of free cash and Rs 11,229.5 crore of restricted cash.
“The total debt (including the capitalised operating lease liability) was Rs 4,48,542 million,” the release said.
About the outlook, the airline said in the June quarter, capacity in terms of ASKs is expected to increase by around 5-7 per cent compared to the fourth quarter of fiscal 2023.
Over the past several quarters the aviation industry globally is facing supply-chain disruptions, leading to shortages of spare engines, Negi said.
“Some of the aircraft remain grounded due to this issue during the quarter. On the other hand demand for air travel remains robust, warranting us to deploy additional capacity, including through wet leasing and lease expansion to enable us to remain on track with our growth plan.” “The number of grounded aircraft due to supply-chain issues is a stable number and it is in the high 30s. And we have taken a lot of mitigating measures to deal with that situation,” Elbers noted.
Negi said that the airline had Rs 121.9 billion free cash at the end of March 2023, and a part of it will be deployed towards the growth in initiatives the company is embarking upon, such as in the growth of digital space, expansion of some of the infrastructure as well as in international expansion and also to start off areas of loyalty programmes, among others.
“But, we have to keep investing. We are looking to double up in seven years and that is where the cash is going to be prioritised,” he added. During the March quarter, IndiGo operated at a peak of 1,815 daily flights, including non-scheduled flights.
The carrier had 304 planes, including 162 A320 neos, 79 A321 neos and 2 A321 freighters at the end of March.
Shares of IndiGo declined 1.57 per cent to close at Rs 2,264 apiece on the BSE.
