Business

IndiGo loss widens to ₹1,062 cr. on higher costs

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Airline’s revenue rises 31% to ₹8,105 cr.

IndiGo reported its highest-ever loss of ₹1,062 crore due to mounting costs from lease liabilities, maintenance of its older aircraft and lower aircraft utilisation because of a delay by the government in re-allocating Jet Airways’ domestic and airport slots and foreign traffic rights.

Tipping point

The ‘softening’ of the market in the quarter beginning October despite Dussehra and Diwali is a “tipping point” and is likely to lead to a flat growth year-on-year for the airline, its CEO Ronojoy Dutta said during an analyst’s conference call.

The loss in the quarter-ended September is the highest for the airline and is worse than its quarterly loss recorded same time last year which was due to an increase in fuel cost and rupee depreciation.

“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,” he said.

The low-cost carrier’s revenue from operations of ₹8,105 crore was 31% more than the third quarter of last year while total expenses of ₹9,571 crore was an increase of 27.6%.

There is also a downward revision in IndiGo’s forecast for an increase in capacity, i.e new aircraft joining the fleet, from 30% to 25% for this fiscal.

From the beginning of calendar year 2019, the airline has been expanding its operations to international destinations within six hours from India and will continue to do so. Apart from Kolkata to Ho Chi Minh already inaugurated, there may be connections from more Indian destinations to Vietnam. In China, too, the airline plans to connect seven more destinations apart from Guangzhou and Chengdu already launched. Russia, Africa and more connections to the Middle East are also on the anvil, according to the airline’s CEO.

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Printable version | Dec 7, 2019 10:28:54 PM | https://www.thehindu.com/business/indigo-loss-widens-to-1062-cr-on-higher-costs/article29789561.ece

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