IndiGo, the Delhi-based low-cost airline, reported a loss of Rs 3818 million for the second quarter, excluding foreign exchange losses, This is down from 14,699 million in the previous quarter. The losses for the latest quarter are an estimated $46.39 million.
In a statement, IndiGo said that if the foreign exchange losses for the latest quarter (which stood at Rs 12015 million or $ 145.99 million) were included, then the net losses stood at Rs 15,833 million ($ 192.38 million). The Indian Rupee, like several global currencies, lost heavily against the US dollar in the past few months.
For the quarter that ended September 30, 2022, the airline saw a 75 percent increase in capacity. Passenger numbers increased by 75.9 percent to 19.7 million. Revenue from operations increased by 122.8 percent to Rs 124,976 million ($ 1518.54 million).
“This is the second consecutive quarter wherein we have operated at higher than pre-covid capacity. In spite of a seasonally weak quarter, we witnessed relatively good yields with strong demand across the network. However, fuel prices and exchange rates have adversely impacted our financial performance. We are on a steady path to recovery, benefiting from enormous opportunity both in domestic and international markets,” Pieter Elbers, Chief Executive Officer of IndiGo, said, commenting on the results.
Total income for the quarter ended September 2022 was Rs 128,523 million ($1,561.64 million), an increase of 121.6 percent over the same period last year. For the quarter, IndiGo’s garnered Rs 111,104 million ($ 1,349.98 million) from ticket revenues, an increase of 135.6 percent. In comparison, ancillary revenues were recorded at Rs 12,872 million ($156.40 million), an increase of 57.4 percent compared to the same period last year.
The statement adds that in the third quarter of the fiscal year 2023, available Seat Kilometers (ASK) capacity is expected to increase by around 25 percent compared to the third quarter of the fiscal year 2022.
Commenting on IndiGo’s latest results, Satyendra Pandey, Managing Partner, Advisory firm AT-TV, said the results confirm that fuel and foreign exchange continue to weigh heavily on the sector as a whole. “Q2 is seasonally a weak quarter, so the results must be seen in that context. While there is much talk about passenger volumes, this cannot be conflated with profitability. At its core, the airline is losing money on each seat flown, which needs to be reversed. As expected, strategic and tactical measures towards reducing costs are being undertaken,” Pandey said. He believes that Q3 will be much stronger given that the holiday demand has been very strong in terms of revenue. “Even so, the challenge of macro fundamentals remains,” he added.
SpiceJet, the other listed Indian airline, has yet to announce its latest financial results or give a date when they will be announced. India has more than five major airlines, including Vistara, a joint venture between Tata Sons and SIA, GoFirst, and AirAsia; only two are listed.
The financial health of the Indian industry was highlighted by CAPA India Advisory Mid-Year Aviation Outlook FY 2023, which was released three days before the IndiGo latest results, which said that airlines losses are expected to be significantly higher than estimated at the start of the year and could exceed $2.5 billion (excluding accounting adjustments and major impairment costs). The report adds that of the $2.5 billion losses, $0.90 billion to $ 1.0 billion will be accounted for by low-cost airlines. (CAPA India had earlier predicted losses at $ 1.4to $ 1.7 billion)
IndiGo had a fleet of 279 aircraft and 1 A321 freighter at the end of September this year, a net decrease of three passenger aircraft during the quarter.