IndiGo Owner Posts First Quarterly Loss In Nearly 3 Years
InterGlobe Aviation reports loss of Rs 652 crore in July-September Higher crude prices, rupee weakness increase costs for IndiGo Aircraft fuel expenses surge over 84%
IndiGo owner InterGlobe Aviation Ltd posted on Wednesday its first quarterly loss since its stock market debut in November 2015 as higher crude prices and a weaker rupee pushed its costs higher. Airline profits in the world's fastest-growing aviation market have been dented by a surge in crude oil prices and a depreciating rupee, with InterGlobe's rival Jet Airways Ltd struggling to keep itself afloat.
"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," Chief Executive Officer Rahul Bhatia said in a statement.
InterGlobe reported a loss of Rs 652 crore ($89.1 million) for the quarter ended September 30, while revenue from operations rose 16.9 per cent.
Total expenses soared 58.2 per cent to Rs 7,502 crore, with aircraft fuel expenses surging 84.3 per cent and foreign exchange loss widening over seven-fold.
IndiGo expects a 35 per cent rise in third-quarter available seat kilometres, a measure of the airline's passenger carrying capacity.
Shares of the low-cost carrier closed up 1.6 per cent, while the broader market ended 0.8 per cent higher.
IndiGo moves to preserve cash
IndiGo has pushed back plans to own Airbus A320neo planes to preserve cash and will continue to lease them, its interim CEO said on Wednesday.
"At times when there is a little uncertainty we want to be prudent with cash, so right now we are holding off buying any A320s with cash and continuing to rely on sale and leaseback," Rahul Bhatia said on an analyst call.
IndiGo already owns ATR planes using free cash and had plans to own some A320neo aircraft as well but has now put the decision on hold and will review it in future, Bhatia said.
IndiGo has also put on hold plans to launch low-cost long haul flights and will increase its international presence using its existing fleet of A320neo aircraft. This is likely to help the airline that is looking at a 30 per cent increase in passenger carrying capacity in the current fiscal year.
IndiGo is taking deliveries of aircraft from Airbus that were previously delayed because of problems with the engines manufactured by United Technologies' Pratt & Whitney.
"Even if we have somewhat of a bubble in our capacity during these two quarters we are still comfortable with our long term capacity plans," said the carrier's senior adviser, Greg Taylor.
