India
India’s largest and most cost-efficient carrier reported a net loss of Rs 652 crore in the July-September quarter, according to the company exchange filings
Mumbai: InterGlobe Aviation Ltd., Indigo’s parent company, reported its first quarterly loss owing to rising fuel prices, a weaker rupee and competitive fares.
India’s largest and most cost-efficient carrier reported a net loss of Rs 652 crore in the July-September quarter, according to the company exchange filings.
“Aviation in India is facing significant pressures from high fuel costs, rupee depreciation and intense competition, all of which have impacted our profitability this quarter,” Rahul Bhatia, interim chief executive officer, said. “Despite the difficult environment, IndiGo remains well-positioned thanks to our low-cost structure and strong balance sheet.”
According to Bloomberg analysis, the loss was pegged at Rs 470 crore. The company booked for tax credits worth Rs 336 crore during the quarter, which lowered the net loss amount for the airline.
Revenue rose 17% to Rs 6,185 crore from a year earlier, as IndiGo flew more passengers. That came at the expense of yields as intense competition restricted its ability to raise fares to sufficiently cover higher costs. Its yield, which measures average earnings per passenger per kilometre, declined by 10% to Rs 3.21.
The analysis stated that earnings before interest, tax, depreciation, and amortization and rental cost declined 93 percent to Rs 111 crore, partly on the back of higher maintenance costs related to old A320neo aircraft.
Delay in the delivery of A320neo forced IndiGo to lease older planes from the secondary market which have higher maintenance costs and burn more fuel.
CEO writes to staffers
IndiGo co-founder Bhatia, in an e-mail to the employees, urged them to help reduce costs further.
He expressed "disappointment" at the financial performance, but said he was confident of success going forward.
The second quarter is typically the weakest period of the year as demand slows down due to school openings and monsoon season, he told the employees, adding, "but this year has been unusually difficult.
"In summary, we are disappointed with our financial performance during the quarter and our financial results need to improve going forward. But that being said, I am confident that we are on the right course to make IndiGo even greater," Bhatia said in the communication.
(With agency inputs)
Read Exclusive COVID-19 Coronavirus News updates, at MyNation.