IndiGo reports ₹1,062 crore loss in Q2

India’s largest airline lndiGo reported a net loss of ₹1,062 crore in the second quarter of the ongoing fiscal, after reporting its highest ever quarterly profit of ₹1,203 core in the preceding April to June period. Its loss widened by 63% over the same quarter a year ago, in what is a seasonally weak time for the aviation industry.

The airline on Thursday said that its profitability was impacted on account of mark-to-market losses on capitalised operating leases of ₹428.2 crore and higher maintenance cost [of aircraft] of ₹319 crore. The latter relates to the airline’s older fleet of Airbus 320ceo aircraft of which 129 are in operation and account for over 50% of its fleet.

Total income for the quarter ended September 2019 was ₹8,539.8 crore, an increase of 31.l% over the same period last year on a capacity growth of 24.2%. The airline’s ticket revenue collection stood at ₹7,100.8 crore, an increase of 34.4%, while its ancillary revenues were ₹930.2 crore, an increase of 29.8% compared to the same period last year.

"In a historically weak quarter, we registered a negative profit before tax margin of 12. 7% compared to 16% margin loss registered in the same quarter last year,” said Ronojoy Dutta, CEO, InterGlobe Aviation, which owns and operates IndiGo, in a statement to the bourses. “While our revenue performance was much better during the quarter, the losses were accentuated by forex losses on operating lease liabilities created under IND AS 116, and re-assessment of accrual estimates for future maintenance cost.”

Later, while speaking on an investor conference call, Aditya Pande, CFO, InterGlobe Aviation said that employee costs in the quarter had spiked by 56%, which had increased the airline’s overall expenses in the quarter under review. "There are 600 pilots under training and there were salary hikes. We expect our employee costs to go down by the second half of this fiscal,” added Pande.

The airline’s senior management also said that aircraft utilisation in the July to August period was lower by 9% year-on-year on account of IndiGo not being awarded airport slots that were vacated by Jet Airways.

“We remain focused on our growth plans and are expanding both domestically and internationally. We added 7 new domestic destinations and 6 new international destinations this past quarter and are looking to further grow our network profitably,” Dutta said. He, however, pointed out that the ongoing festive season in India hasn’t been good for the aviation industry. “Revenue during the festive season has been subdued. We are seeing declines in yields on metro-to-metro markets as more low-cost capacity is in place of Jet Airways,” said Dutta.