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April 21, 2024
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Delhi-based low-cost airline IndiGo has reported a net profit of Rs 14.2 billion for the quarter that ended December 31, 2022, as compared to a net profit of Rs 1.29 billion in the same quarter previously, the airline informed the stock exchange today. The airline’s statement adds that for the quarter ending December, it reported a profit of Rs 20.09 billion excluding foreign exchange loss. Including a foreign exchange loss of Rs 5.86 billion, the net profit for the quarter stood at Rs 14.22 billion. IndiGo reports record revenues in Q3 FY23.

Commenting on the third quarter performance, CEO Pieter Elbers, said that the third quarter performance was strong both operationally and financially in the backdrop of robust demand for air travel. I am proud to report the highest ever quarterly revenue of Rs 154.1 billion and robust profit of Rs 14.2 billion rupees for the third quarter of the fiscal year 2023,” Elbers said. The December quarter was Elbers’ first full quarter as he joined IndiGo in September. In Q2, the airline reported a Rs 3.818 billion loss.

IndiGo is the second airline in India to have reported profits in the recent past. On January 23, Vistara a joint venture between Singapore Airlines and Tata Sons, reported a net profit for the quarter that ended December 31, 2022, but the airline’s Chief Executive Officer, Vinod Kannan declined to get into specific numbers. On January 30, Economic Times, an Indian economic daily reported that the AI Group is likely to post an operating profit in the fiscal year 2023. Incidentally, IndiGo is the only listed airline among these three which are making profits.

For IndiGo the total income for the December quarter stood at Rs 154.1 billion, an increase of 62.6 percent over the same period last year. For the quarter, the airline’s passenger ticket revenues were Rs 131.62 billion, an increase of 63 percent while ancillary revenues were Rs 14.22 billion, an increase of 24.6 percent compared to the same period last year.

Total expenses were Rs 139.86 billion, an increase of 49.6 percent over the same quarter last year while fuel costs were Rs 57.85 billion during the quarter that ended December 2022 as compared to 32.69 billion a year ago, registering an increase of 77 percent.

Analysts’ views

Commenting on IndiGo’s latest results, Ansuman Deb, Vice President, ICICI Securities, said that the strong results were a combination of seasonal demand which helps both fares and PLFs and incrementally lower fuel costs. “The fear of impact from aircraft grounding is well addressed through capacity growth guidance of 15 percent plus for FY24 and likely OEM compensations related to cost escalations related to grounding. Outlook is promising hereon considering that the competition remains rational among airlines as (is) evident from healthy fares, IndiGo remains (the) cost leader with an average fleet age of only 3.5 years with the largest fleet of 302 aircraft among Indian airlines. The company is finally upping the ante on strategy of internationalization,” Deb says. He adds that the balance sheet now has free cash net of debt of Rs 70 billion.  

Satyendra Pandey, Managing Partner of aviation services firm, AT-TV, is of the view that IndiGo’s results point to the strong demand that the quarter saw including yields that held up. “With an average fleet of approximately 300 aircraft, and with one in 2 domestic passengers taking to the skies on an IndiGo aircraft, the airline was able to deliver a strong performance,” Pandey points out.

Capacity allocation

He adds that the Airbus A321neos helped with dynamic capacity allocation, especially during peak hours, and was managed quite well. “This gave IndiGo a disproportionate advantage which will sustain for the coming quarters. Performance was helped both by IndiGo’s forward planning and weakness of other players some of who are sourcing emergency credit guarantees by the government,” Pandey adds.

Pandey cautions that on the costs side, fuel prices and foreign exchange continue to be a concern though the fleet costs show significant improvements. “While the airline is positioned well, the current results cannot be extrapolated into the future. Fare wars and capacity wars are imminent and yields have already started to show softening,” Pandey says.

As on December 31, the airline had a fleet of 302 aircraft including 23 A320ceo’s, 160 A320neo’s, 78 A321neo’s, 39 ATRs, and two A321 freighters.

author avatar
Ashwini Phadnis
Former Senior Deputy Editor at Business Line (aka The Hindu Business Line)

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