India’s largest airline IndiGo swung back into profit after registering seven consecutive quarters of loss thanks to a rebound in travel demand during the holiday season.
The company posted a profit of Rs 129.79 crore in the December quarter (Q3) financial year 2021-22 (FY22), primarily driven by higher revenue and yields. IndiGo had reported a loss of Rs 621.80 crore in the corresponding quarter of Q3FY21.
Net revenue increased 89 per cent to Rs 9,294.77 crore from Rs 4,909.98 crore a year ago. Its passenger ticket revenues came in at Rs 8,073.10 crore, up 98.4 per cent while ancillary revenue stood at Rs 1,141.70 crore, an increase of 41.3 per cent compared to the year-ago period.
The company also appointed co-founder Rahul Bhatia as managing director with immediate effect and he would oversee all aspects of the airline.
“We were encouraged to see how rapidly the domestic traffic reverted to pre-Covid levels during the quarter. We added capacity to take advantage of the ongoing recovery and we are pleased to see our efforts culminate into a profitable quarter,” IndiGo Chief Executive Officer Ronojoy Dutta said. He added that without the Omicron wave, which impacted revenues during the latter part of December, the company would have reported even better numbers.
The airline has deployed around 45 per cent more capacity during the quarter than in Q2. The capacity deployed has reached to around 88 per cent of pre-Covid level, when compared quarterly, and about 97 per cent in December.
However, Dutta, addressing analysts in a post-earnings call, said the spread of the Omicron variant has impacted the company’s strategy with the airline being forced to reduce capacity by 10-15 per cent sequentially in Q4.
“We are in a volatile environment. While we are facing declining revenues during the fourth quarter, the experience of other countries makes us believe that the recovery will be fast. The fundamentals of India remain strong,” he said.
The airline registered higher yields as a government cap on price beyond 15 days and weaker rivals who were not able to deploy capacity allowed it to aggressively price its tickets higher. The company’s yield went up by 19.2 per cent as compared to the corresponding period a year ago, while the revenue per available seat kilometer went up by 25 per cent.
On being quizzed if such fares will be sustainable in the long term, as new airlines like Akasa will start operations, Dutta said the airline’s low-cost structure allows it to deploy significantly higher capacity, thereby providing better connections to passengers, and this will allow it to keep ticket prices high. “I have always said that India has one of the lowest unit fares in the global aviation market. The only way I see it move is higher,” he said. The board, during its meeting on Friday, unanimously approved the appointment of Bhatia as MD with immediate effect, subject to shareholders’ approval.
Bhatia said his agenda would be transformational and would focus on expanding the airline’s presence in India and in international markets and building for the long term.
(With inputs from PTI)