IndiGo Records a Profit of Rs 189 Crore for the September Quarter
- ByStartupStory | November 4, 2023
InterGlobe Aviation, the parent company of IndiGo, has reported a surprising profit at the consolidated level for the September quarter, marking its best performance in five years. This achievement is particularly noteworthy because the September quarter is traditionally considered the weakest period in the aviation industry.
The impressive financial results can be attributed to several key factors. A significant increase in the number of passengers, improved seat occupancy levels, and lower fuel costs collectively contributed to elevating the company’s profit margins to remarkable levels for this reporting month. This also marks the fourth consecutive profitable quarter for IndiGo, indicating a strong and consistent financial performance.
For the September quarter, IndiGo recorded a net profit of Rs 189 crore, a stark contrast to the net loss of Rs 1,583 crore in the same quarter the previous year. These results exceeded even Bloomberg’s consensus estimate, which had projected a net loss of Rs 316 crore for the quarter.
Excluding the foreign exchange loss, which amounted to Rs 617 crore, IndiGo’s profit would have been a substantial Rs 806 crore, as stated by the company.
The company’s consolidated revenue from operations for the September quarter stood at Rs 14,944 crore, reflecting a significant 20% year-on-year increase, surpassing Bloomberg’s estimate of Rs 14,885 crore.
One of the most striking improvements was in EBITDAR (earnings before finance income and cost, tax, depreciation, amortization, aircraft, and engine rental) margin, which jumped to 16.4% compared to the mere 1.8% reported in the same quarter the previous year.
IndiGo’s success was further underscored by a 33% year-on-year increase in the number of passengers flown during the September quarter, totaling 26.3 million. Passenger ticket revenues for the quarter amounted to Rs 13,069 crore, showing a substantial 17.6% increase, while ancillary revenues reached Rs 1,551 crore, a remarkable 21% increase compared to the same period in the previous year.
Fuel costs, accounting for 38% of the company’s total expenses, declined by 6.4% during the September quarter, providing another boost to the company’s financial health. This impressive performance has significantly increased the company’s cash reserves, which now stand at Rs 30,665 crore as of the end of the September quarter.
Notably, IndiGo also managed to reduce its cost of available seat kilometer (CASK) by 27% and its revenue per available seat kilometer (RASK) decreased by 7%.
However, the company faces challenges ahead, as it recently received communication from engine provider Pratt & Whitney (P&W) regarding power metal issues. This has led to an accelerated need for inspections and shop visits for a large number of engines between 2023 and 2026, with the majority of these removals planned for 2023 and early 2024. The impact of these developments is expected to lead to more aircraft groundings in the near future.
IndiGo already has a significant number of grounded aircraft, with approximately 40 currently out of service. To address this, the company is in the process of executing lease agreements for 12 additional aircraft from the secondary market, with deliveries expected to commence from January 2024 onwards.
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IndiGo’s fleet currently consists of 334 aircraft, representing a substantial 20% year-on-year increase. This includes 20 A320 CEOs, 176 A320 NEOs, 93 A321 NEOs, 41 ATRs, 2 A321 freighters, and 2 B777 (damp lease). During the quarter, the airline operated at a peak of 1,958 daily flights, including non-scheduled flights, underscoring its robust presence in the aviation industry.
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