The airline is looking at shoring up cash on its books as it will take the sector a few quarters to deploy its full capacity of 262 aircraft.
InterGlobe Aviation, the parent of Indigo Airline, on Tuesday laid out a roadmap that will enable it to combat the challenges posed to the aviation industry because of the Covid-19 pandemic. The airline is looking at shoring up cash on its books as it will take the sector a few quarters to deploy its full capacity of 262 aircraft. From returning 120 high-maintenance Airbus CEO aircraft to lessors and replacing them with the more cost-efficient Neos over a period of two years to not paying dividends this year, Indigo is on a mission to conserve cash and shore up liquidity.
The country’s largest airline said it was in talks with lessors to freeze lease rentals and with other partners to negotiate better credit terms. Indigo’s CEO Ronojoy Dutta said, “In times like these we should shift our focus from profitability and growth to liquidity and cash. We ended the quarter with a cash balance of Rs 20,400 crore, of which Rs 8,900 crore is free cash.”
The airline expects to unlock at least Rs 3,000-4,000 crore additional cash through these measures.
Indigo reported a net loss of Rs 870 crore in the March quarter, as the closure of flight operations during national lockdown on account of Covid-19 impacted its financials. For the full fiscal year, Indigo reported a net loss of Rs 233 crore compared to a net profit of `157 crore in the previous fiscal. However, the airline did break even at a full year level. Till the end of February, the airline was profitable, but as it entered March, unit revenues started falling, resulting in an operating loss, explained Dutta.
Even as profitability took a knock, revenues from operations during the quarter increased by 5.3% year-on-year to `8,299 crore. Revenues increased during the quarter on the back of higher ancillary revenues and a modest increase in passenger ticket sales. Total income for the quarter ended March 2020 stood at Rs 8,634 crore, an increase of 4.5% compared to the corresponding quarter last year. For the quarter, Interglobe’s passenger ticket sales rose by 1.3% year-on-year to Rs 71,30 crore while ancillary revenues grew by 30.2% y-o-y to Rs 10,75 crore, an increase of 30.2% compared to the same period last year. Given that cargo operations remained relatively uscathed during the lockdown due to supply of essentials, the company is likely to look at ramping up cargo operations in the coming quarters.
Dutta said, “We will focus on cargo operations even more to rake in revenues. We have learned valuable lessons about the demand and scope for cargo during the lockdown and these lessons will serve us well to augment cargo operations in the months ahead.”
Operationally, the country’s largest airline reported operating income of (Ebitdar) of Rs 86 crore with Ebitdar margin of 1%, compared to Ebitdar of Rs 2,201 crore with Ebitdar margin of 27.9% for the same period last year.