IndiGo’s Q2 loss widens to Rs 1,585 cr | The Financial Express

IndiGo’s Q2 loss widens to Rs 1,585 cr

Aircraft fuel expenses, which accounted for 43% of the company’s total expenses, jumped three times to Rs 6,257.9 crore during the quarter.

IndiGo’s Q2 loss widens to Rs 1,585 cr
IndiGo’s cost of available seat kilometre (CASK), the unit cost for each seat for every kilometre, went up 14%.

InterGlobe Aviation, the parent company of IndiGo, India’s largest carrier, on Friday saw its standalone net loss widen by 10% to Rs 1,585 crore for the three months ended September. The loss was worse than the Bloomberg estimate of Rs 1,284.5 crore.

An increase in fuel expenses due to a weaker rupee and a surge in employee costs eroded margins. However, the total revenue from operations for the quarter jumped 123% to Rs 12,479 crore following an 80% increase in passenger numbers to 19.7 million.

In a post-earnings call, InterGlobe Aviation CEO Pieter Elbers said: “The depreciation of the rupee and higher fuel prices continue to be the major headwinds to our profitability and remain a concern.”

Aircraft fuel expenses, which accounted for 43% of the company’s total expenses, jumped three times to Rs 6,257.9 crore during the quarter. The other two major expenses — supplementary rentals, aircraft repair and maintenance expenses, and employee costs – increased 25.8% and 43.8%, respectively.

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The earnings before finance income and cost, tax, depreciation, amortisation and aircraft and engine rental (Ebitdar) decreased by nearly 33% to Rs 229 crore, while the Ebitdar margin dropped to 1.8% during the quarter from 6.1%. The passenger load factor improved to 79% from 71%.

IndiGo’s cost of available seat kilometre (CASK), the unit cost for each seat for every kilometre, went up 14%. Revenue per available seat kilometre (RASK), the revenue each seat kilometre generated, however, improved by 27%.

“We continue to recover from Covid and have deployed more than the pre-Covid capacity. This has allowed us to make the best use of the opportunity presented by the robust demands in the market,” Elbers said.

The September quarter was the second consecutive quarter wherein IndiGo operated at higher than the pre-Covid capacity. As of September end, the company had a fleet of 279 aircraft, including a net decrease of three passenger aircraft during the quarter. The company operated at a peak of 1,630 daily flights during the quarter, including non-scheduled flights.

IndiGo had an on-time performance of 83.5% in the four key metros and a flight cancellation rate of 1.05%. The December quarter of this fiscal will see capacity increase in terms of available seat kilometre (ASK) of around 25% compared with the same quarter last year.

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“IndiGo has reported a subdued Q2FY23 performance due to higher ATF prices. We believe that IndiGo’s strong balance sheet position would help in sustaining its market share along with pricing power, going forward, which would drive its overall profitability. Rising yield and pricing discipline would support turnaround despite higher fuel prices. We expect fuel prices to normalise by FY23 end,” Mitul Shah – head of research at Reliance Securities, said.

The company’s stock closed 0.32% down at Rs 1,797.6 on the BSE on Friday.

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First published on: 05-11-2022 at 02:10 IST