On the back of other income and refund of deferred tax asset, low-cost airline IndiGo, which is largest by market share, continued to remain profitable in fiscal 2011-12 when all other carriers posted net losses. However, the unlisted firm’s net profit in fiscal 2011-12 fell by more than a fifth to R127.8 crore from Rs 650.32 a year before that latest data filed with the registrar of companies shows. The airline which was started by Rahul Bhatia in 2006 turned profitable in 2008 and has remained so since even though all other carriers have been posting losses since 2011-12, with some having huge debts also.
The fall in profitability would have been higher but for a refund of R63.9 crore deferred tax.
?Margins were under huge pressure because average price of fuel is now higher than what it was a year ago,? IndiGo president Aditya Ghosh had said in March this year at the Hyderabad air show. ?There has been a growth in revenue and we will turn out to be profitable at the end of the year but it will be much smaller profit than we have done in previous year.? “For us, profitability means that we are able to get spare parts on time, pay salaries on time, maintain integrity of schedules and plan for growth,? he had added.
During fiscal 2011-12 the airline’s total revenue from operations increased 45% to R5,552.4 crore from a year ago. However, this increase was negated by a 74% increase in total expenses to R5,654.1 crore. Expenses increased mainly on account of aviation turbine fuel or ATF cost which accounted for half of the total expense. ATF costs rose 88% to R2,873.59 crore.
IndiGo benefited from a R165.66 crore other income which helped the airline remain profitable. Last week, the government had informed Parliament that Rahul Bhatia-promoted airline had an operating loss of R87.8 crore in the 2011-12 fiscal.
When contacted, IndiGo said it continues to generate ?a healthy level of profitability?.
?As a matter of policy, IndiGo does not comment on its profitability,? IndiGo had stated in a statement last week.
As of March 31, the airline had long-term and short-term borrowings of R936.12 crore. Its total liabilities including borrowings stands at R3,421 crore.
In October, IndiGo?s board increased the borrowing limit of the airline to R10,000 crore from R2,500 crore previously to fund its ?new phase of growth?.
?The business has increased substantially as there has been acquisition of new aircraft to cater to new sectors,? the company said in a filing to the Registrar of Companies. ?Accordingly, the company would require long-term capital funds to sustain the increasing level of operations that would necessitate borrowing from the market.?
The Delhi-based low-cost carrier has a large number of planes on order. It is still receiving deliveries for an order placed in 2005 for 100 of the Airbus A320 planes worth $6 billion. From 2016, it will start receiving deliveries for an 180 of the Airbus A320s and A320neo planes worth $15.6 billion placed in 2011.
