1. Competition hits IndiGo hard, profit falls 7%

Competition hits IndiGo hard, profit falls 7%

InterGlobe Aviation, which owns the low-cost carrier IndiGo, on Monday posted a 7% year-on-year decline in its net profit at R592 crore in Q1FY17, which the company attributed to competitive pressures.

By: | New Delhi | Updated: August 2, 2016 7:00 AM
InterGlobe Aviation, which owns the low-cost carrier Ind (Reuters) InterGlobe Aviation, which owns the low-cost carrier Ind (Reuters)

InterGlobe Aviation, which owns the low-cost carrier IndiGo, on Monday posted a 7% year-on-year decline in its net profit at R592 crore in Q1FY17, which the company attributed to competitive pressures.

Total income from operations during the period increased 8.5% year-on-year to R4,545 crore. However, the
ebitdar (earnings before interest, tax, depreciation and rentals) margin fell to 33.9% from 37.4% in q1FY16.

“Profitability was lower than last year primarily because of competitive fare pressures. We have reduced our debt by R458.9 crore during the quarter,” IndiGo president and whole-time director Aditya Ghosh said. Finance costs in Q1FY17 rose to R116 crore from R72 crore in Q1FY16.

aeroplane

During the period, Indigo reported a 6.9% increase in passenger revenue at R3,971.73 crore while ancillary revenues spiked 20.8% at R580.57 crore compared to Q1FY16.

The seat occupancy during the April-June quarter declined 4.7% to 83.3% compared to 88.0% in the same period last fiscal. The airline’s total debt reduced to R2785.7 crore on June 30, from R3244.6 crore on March 31, primarily due to retirement ofdebt of three aircraft on finance lease, according to a company statement.

“The entire debt for IndiGo is aircraft related and the airline does not have any working capital debt,” it said.
IndiGo, which is the country’s largest airline, flying about one in three passengers increased its fleet size to 109 during the quarter. The airline said it is slowing down deliveries of Airbus’ A320neo narrow-body planes to allow engine supplier Pratt & Whitney to catch up on the production of upgraded engines.

“The A320neo operations continue to be a challenge,” it said. Pratt & Whitney, a unit of United Technologies Corp, has encountered problems with slow engine start up times and erroneous engine software messages in the new engine, already causing a delay in the delivery of planes to Indigo.

IndiGo has ordered a total of 430 A320neo aircraft, making it one of the European planemaker Airbus’ largest customers.

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