Budget carrier IndiGo has defied market dynamics by consistently registering profits in a market where more of its peers continue to bleed. In an interview with Mihir Mishra, the airline president Aditya Ghosh says that the ‘boring consistency’ with which they operate separates them from the rest. He also clarified that there are no plans to go for an initial public offering as IndiGo is a net debt-free company and has healthy cash flows. Excerpts:
In a market where most players are losing money, how have you managed to register profits?
Our entire profits of Rs 993 crore in 2012-13 have come from operations.
So, nothing has come in from the sale and lease back of aircraft?
Whatever comes from sale and leaseback is amortised over the duration of the lease itself. Now, let me give you a perspective on sale and lease back by our competitors. 89 per cent of our planes are on lease. The percentage for Jet Airways is 90, SpiceJet is 69 and GoAir is 93. So, everybody is doing sale and lease back and there is nothing unique we are doing.
The other argument is that you ordered planes in bulk and negotiated huge discounts, hence, more earnings per plane from sale and leaseback.
Yes. But at the same time people (read airlines), who would have ordered plane before us, would perhaps have got a cheaper price than us.
The others never planned it and ordered in bulk, the way you did...
On the other hand, sale and lease back also means that you are paying higher lease rentals. If you have it on your books, you are only paying interest to the banks. So, the earning, kind of, gets balanced out somewhere. In any case, sale and lease back is just a way of financing, like other forms.
You added 39 per cent capacity during 2012-13. How much of it was added in the international sector?
Not very much. International is about 10 per cent of our total capacity and where is the market place to increase it further. Today the whole industry in India is 62 million passengers annually. The CAPA report says