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IndiGo reports record Q2 loss of Rs 1,062 crore

​IndiGo posted a 31% increase in its revenue from operations to Rs 8,105 crore.

, ET Bureau|
Updated: Oct 25, 2019, 10.07 AM IST
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Interglobe Aviation on Thursday posted a quarterly loss of Rs 1,062 crore, its biggest ever since the owner of IndiGo airline went public four years ago, primarily due to its failure to keep a check on costs.

The company reported a net loss of Rs 1,062 crore for the second quarter of the financial year, compared with Rs 652 crore a year earlier when it posted its first net loss since the 2015 listing.

Revenue from operations rose 31% to Rs 8,105 crore. Revenue per available passenger kilometre at the nation’s biggest airline by market share increased 5.7%, while yield or average price rose 9.4%. Indigo’s fuel cost increased just 3% to Rs 3,115 crore, but other expenses jumped 45% to Rs 6,456.2 crore, widening the net loss.

A large chunk of the cost increase came from maintenance and supplementary rentals, which rose 47% to Rs 1,530 crore.

In a post-earnings conference call with analysts, the airline’s new finance chief, Aditya Pandey, said IndiGo had leased more than 50 of old Airbus A320 Ceo planes which were more expensive to maintain. Also, a chunk of the costs is in dollar terms, which led to the airline recording a mark-to-market forex loss as the rupee weakened against the greenback.

Pandey said maintenance costs would remain high in the ongoing quarter and the next. These will start decreasing only by 2022, once the A320 Ceos are replaced by incoming, upgraded A320 Neo planes. Delivery of the Neos has been delayed because of glitches in the Pratt & Whitney engines powering a chunk of the planes ordered by IndiGo.

Employee costs rose 36% to Rs 1,206 crore. Pandey attributed this primarily to the training costs of 600 pilots hired by IndiGo, as well as salary increases.

Chief operating officer Wolfgang Prock-Schauer said IndiGo was currently taking delivery of six planes a month, but that average would taper off to three. Also, there is a three- to four-month delay in deliveries of the A320 Neo planes, which will impact the airline’s overall capacity addition.

IndiGo had a fleet of 245 planes and operated 1,476 daily flights at the end of September. Its capacity is expected to increase by 25% in the next one year.

While IndiGo’s yields were higher from a year earlier, chief executive Rono Dutta said industry demand was impacted, especially proven by some flash sales in the festive weeks of Dussehra and Diwali. He said the metro routes — connecting Delhi, Mumbai, Bengaluru, Hyderabad, Chennai and Kolkata — where low-cost airlines had deployed capacity to replace that of grounded carrier Jet Airways, had been more affected in terms of yields.

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