Interglobe Aviation, which owns IndiGo Airlines, on Tuesday reported a 25.08% y-o-y decline in its net profit at Rs 487.25 crore during the October-December quarter mainly because of substantial decrease in yields due to lower fares and increase in fuel and aircraft related expenses.
Revenues during the quarter increased 16.03% y-o-y to Rs 4,986.49 crore. During the quarter the airline reported 16% y-o-y increase in passenger revenues and 12.5% y-o-y increase in ancillary revenues. The October–December quarter is usually good for the airlines since festivals like Dussehra, Diwali and Christmas fall during these three months when travel across the country increases substantially.
In terms of expenses, fuel cost which is 40-45 % of the total operating cost of an airline, increased by a whopping 43% y-o-y due to almost 15% increase in crude prices in the international market. As a consequence of increase in capacity, the aircraft rentals increased by 24% y-o-y while the landing and parking charges spiked substantially by 44.32% y-o-y during the same time. The airline registered 31% y-o-y increase in other expenses as well.
Notwithstanding the increase in topline, yields during the quarter fell by16% y-o-y to R3.48 from R4.14 in the corresponding period last year.
As a consequence the operating profit (Earning before interest, tax, depreciation, amortisation and rentals) decreased by12.9% y-o-y to R1,460.54 crore as compared to R1,676.81 crore in the third quarter last fiscal. The increase in expenses adversely impacted the operating margin which during the quarter decreased to 29.3% when compared to 39% in the corresponding period.
“We have witnessed another profitable quarter with lower yields and higher fuel prices. We see robust traffic growth ahead and will continue to grow and strengthen our network with a view to maximising our long term profitability,” said Aditya Ghosh, president and whole-time director, Indigo.
Overall the Delhi-based airline saw a 30% y-o-y increase in total cost. Indigo is expected to increase is capacity to 133 aircraft from its current 126 in the fourth quarter. The average sear kilometer (ASK) as a result is expected to increased by 25%.