IndiGo Q4 Net Flat as Sales Fail to Soar
FLIGHT PATH Operating costs and weak revenue growth offset fuel cost benefits
FUEL COST VS Mumbai: IndiGo's fourth quarter net profit remained flat on year hurt by weak revenue growth and increase in costs such as lease rentals for planes and engines and salaries, which offset benefits accruing from lower fuel expenses. For the full financial year FY16 its net profit rose 52.6% to .₹ 1,989.7 crore.
The country’s biggest airline by market share posted a net profit of .₹ 579.3 crore for the JanuaryMarch quarter, compared to .₹ 577.3 crore a year earlier. Revenue grew 6.8% to .₹ 4,060.6 crore from .₹ 3,800.9 crore in the corresponding period last year. Its operating profit for the quarter fell 12% to .₹ 680.8 crore.
The airline had on February 29 estimated a revenue growth of 6% to 8% and that its net profit would be impacted due to exchange rate movements.
The airline announced a final dividend of .₹ 15 per share for the quarter ended March 31.
Fuel cost for the quarter reduced 15% to .₹ 1,023.6 crore, but nonfuel costs rose 29% to .₹ 2,413.1 crore. Average fare for the quarter fell 15% on year to .₹ 3,958 and revenue per available seat kilometre fell by 10% indicating the pressure on yields as the airline increases its capacity. For fiscal year 2017, IndiGo’s available seat kilometre will increase by 34% as new aircraft join its fleet.
IndiGo’s finance chief Pankaj Madan said the increase in non-fu- el costs was on account of factors such as rupee depreciation and excess of staff in comparison to capacity. IndiGo faced close to a threemonth delay in getting the first of its Airbus A320 Neo planes. It has ordered a total of 430 planes.
Ghosh said the additional staff expenses will get defrayed once more planes start coming in. It has got four of them. The latest one joined its fleet in the afternoon.
Ghosh also said after the first150 planes join IndiGo’s fleet, it will review its choice of the engine maker. US’ Pratt & Whitney currently supplies the engines to most Neos globally including those operated by IndiGo. The delay in deliveries have been due to technical glitches with the Pratt & Whitney engines, primary among them being the gap taken between the cooling time when the engines stops and the restart.
Ghosh said the technical dispatch reliability—a measure for how technical glitches affect a plane’s operations — is 99.02% on the Neo compared to a more efficient 99.94% on its older planes.
Ghosh said the airline will “closely look at” how airlines that have taken Neo engines manufactured by CFM International fare in terms of aircraft performance. CFM is a joint venture between GE Aviation, a division of General Electric of the United States and Snecma, a division of Safran of France.
Last month Al Baker, the chief of Qatar Airways, also a customer for the Neos said the airline is willing to switch engine makers.