Indigo posts 1ST quarterly loss since its listing
MAIDEN LOSS Weighed down by high fuel costs and weak rupee, IndiGo posts first quarterly loss since it went public in November 2015
BENGALURU: IndiGo owner InterGlobe Aviation Ltd posted on Wednesday its first quarterly loss since its stock market debut in November 2015 as higher crude prices and a weaker rupee pushed its costs higher. IndiGo, the country’s largest airline with over 40% market share, had a profit of ₹551.6 crore in the year-ago period. Airline profits in the world’s fastest-growing aviation market have been dented by a surge in crude oil prices.
MUMBAI: InterGlobe Aviation Ltd, which runs budget airline IndiGo, swung to a maiden quarterly loss since it went public, as sharply higher jet fuel prices and a weak rupee outweighed an increase in passenger traffic.
India’s largest domestic carrier posted a loss of ₹652.13 crore in the three months through September, from a year-earlier profit of ₹551.56 crore. It is the airline’s first loss since it listed on local stock exchanges in November 2015. IndiGo was also hit by lower yields and adverse foreign exchange fluctuations in the quarter.
Higher fuel prices and a weakening rupee have swelled operating costs at Indian carriers. A weak rupee has added to the woes of airlines, as most of their expenses are dollar-denominated. In the past year, the benchmark Brent crude has gained 33.3% to $76.48 a barrel, while the rupee has weakened 11.1% to 73.16 to a dollar.
Total revenue rose 18% from a year earlier to ₹6,514.20 crore last quarter, as it carried more passengers. The growth in traffic came at the expense of yields, as intense competition limited its ability to raise fares enough to sufficiently cover increased costs.
IndiGo, one of the biggest customers globally for Airbus, would have made a bigger loss in the fiscal second quarter had it not been for finance income, income from sale and leaseback of aircraft and compensation for engine snags that led to the grounding of Airbus A320neo jetliners powered by Pratt and Whitney engines. Other income surged 53% from the year earlier to ₹328.9 crore last quarter. Total expenses at IndiGo jumped 58% in the September quarter to ₹7,502 crore. Fuel expenses soared 84% in the September quarter to ₹3,035 crore.
The airline also incurred a foreign exchange loss of ₹335.4 crore during the quarter.
“Aviation in India is facing significant pressures from high fuel costs, rupee depreciation and intense competition, all of which have impacted our profitability this quarter,” IndiGo co-founder and interim chief executive Rahul Bhatia said in a statement.
IndiGo carried 14.54 million passengers on domestic routes in the September quarter, up from 11.04 million a year earlier, government data showed.
“The yields received (from ticket bookings) during the 0-15 day window remain weak, which have been accentuated due to capacity addition,” Greg Taylor, IndiGo’s senior adviser, said in an analysts’ call to discuss the earnings.
Airlines in India earn more from tickets booked up to 15 days before the date of journey, as they normally cost more than those booked months in advance.
The company has adopted various initiatives to increase efficiency and reduce fuel costs by reducing weights (on flights) and improving navigation and landing procedures, chief financial officer Rohit Phillip said during the call.
IndiGo was witnessing a ramp-up in delivery of A320neo planes, which were earlier delayed by Airbus due to engine issues, said Phillip. It currently has a fleet of 189 planes, including 50 A320neos.