Indigo opts to raise funds through SLB

NEW DELHI: India’s largest domestic airline Indigo has scotched plans to raise funds through a qualified institutional placement (QIP), opting instead to raise money through sale and lease back (SLB) transactions and other alternative options.

“There are several financing options. The ongoing deliveries of neo aircraft (A320neo and A321neo) in FY22 will bring further liquidity,” Indigo’s chief financial officer Aditya Pande told analysts during the airline’s post-result call on Thursday.

The airline will not raise funds through the QIP route, Pande said without elaborating on the decision.

The board of directors of Indigo had in August approved raising up to ₹4,000 crore through a QIP.

Indigo is one of the pioneers of SLB transactions in Indian aviation. An SLB is a transaction in which the owner sells the aircraft and then takes it back on lease from the buyer. This kind of deal typically removes the aircraft and its associated debt from the carrier’s balance sheet.

At the end of the December quarter, Indigo had ₹18,365.3 crore in cash, including free cash of ₹10,920.7 crore. Its total debt stood at ₹27,726.10 crore at the time.

The airline reported a net loss of ₹620.14 crore in the December quarter, as compared to a loss of ₹1,194.83 crore in the quarter to September. Indigo had reported a profit of ₹495.97 crore during the October-december period in 2019.

Passenger demand fell during the second half of December, after the spread of a new variant of coronavirus from the UK, but bounced back during the second week of January, CEO Rono Dutta told analysts during the call.