IndiGo posts surprise ₹130 cr profit; Rahul Bhatia consolidates position as MD

InterGlobe Aviation, the parent of budget carrier IndiGo, posted a surprise profit in the third quarter on Friday as the board of India's largest airline approved the appointment of co-founder Rahul Bhatia as the managing director.

The appointment, which is effective from today, signals an end to the bitter feud between Rakesh Gangwal, the other co-founder at IndiGo, and Bhatia over control of Asia's biggest carrier by market value. Gangwal had earlier accused Bhatia of corporate governance lapses.

In a stock exchange filing, Bhatia said that he would now focus on expanding the airline's presence in India and in international markets and building for the long term.

"Bhatia would oversee all aspects of the airline, and actively lead the management team," says IndiGo chairman Meleveetil Damodaran. "This will further strengthen the airline in the years ahead."

Net profit of the low-cost carrier rose to ₹129.8 crore for the quarter ended December compared with a loss of ₹620 crore in the year-ago period.

Revenue from operations jumped 89.3% year-on-year to ₹9,294.8 crore. This, according to the airline, was aided by a 50.3% increase in capacity in the third quarter compared to the same period last year.

Passenger ticket revenues for the quarter stood at ₹8,073.1 crore, an increase of 98.4% year-on-year and ancillary revenues were ₹1,141.7 crore, up 41.3% compared to the same period last year.

The domestic aviation sector continued to witness significant improvement in passenger traffic due to relaxation of capacity restrictions, the airline says. In October, the Ministry of Civil Aviation allowed airlines to operate at full capacity, doing away with a key restriction which was imposed when domestic flight operations resumed in May 2020 after a two-month lockdown.

"The international sectors also showed strength, adding to the overall capacity deployed, despite being operated under certain restrictions," it further says.

IndiGo, however, cautioned its capacity will reduce in the ongoing quarter due to a decline in travel demand as the Omicron variant led to a rise in infections. "Fourth quarter fiscal year 2022 capacity in terms of ASKs is expected to reduce by around 10-15% as compared to the third quarter fiscal year 2022," the airline says.

The carrier expects passenger traffic and revenue environment to improve once Covid-19 cases start receding.

Total cash at the airline stood at ₹17,320 crore, while its debt rose 27% to ₹35,150 crore compared with a year ago.

Yield - the average amount of revenue received per paying passenger flown one kilometre - rose 19% year-on-year to 4.41.

Total expenses for the quarter stood at ₹9,346.4 crore, an increase of 62.1% over the same quarter last year.

As of December 31, 2021, the airline’s fleet comprised 283 aircraft including 56 A320 CEOs, 140 A320 NEOs, 52 A321 NEOs and 35 ATRs.

IndiGo operated a peak of 1,574 daily flights during the quarter including non-scheduled flights.