IndiGo posts shock loss weighed by fuel, maintenance costs
Revenue for quarter rose 14 per cent to INR169.7 billion but missed estimates
India’s largest airline IndiGo posted a surprise loss “- its first in two years “- weighed down by a higher fuel bill and a jump in maintenance costs.
The carrier operated by InterGlobe Aviation Ltd. reported a loss of 9.9 billion rupees ($118 million) in the three months ended September 30, it said in an exchange filing Friday. A Bloomberg survey of brokerages had forecast an average profit of 1.34 billion rupees for a quarter that usually sees seasonally tepid demand.
Revenue for the quarter rose 14 per cent to 169.7 billion rupees but missed estimates. Total costs climbed 22 per cent to 186.66 billion rupees, with fuel costs jumping 12.8 per cent from a year ago and maintenance costs surging 30 per cent, the filing said. Airport fees for the airline also rose about 40 per cent in the latest quarter.
“In a traditionally weaker second quarter, results were further impacted by headwinds related to groundings and fuel costs,” Chief Executive Officer Pieter Elbers said in a statement. The number of grounded aircrafts and linked costs for the carrier have started declining, he said.
Debt rose 20 per cent from a year ago to 592.37 billion rupees. Its passenger load factor fell to 82.6% from 83.3% in the same quarter last year.
The Gurugram-based carrier also started receiving compensation from Pratt & Whitney’s affiliate in the quarter to mitigate the impact of the grounded planes.
Increasing competition
Airlines in India typically see relatively lower demand in the September quarter. IndiGo had a 62.5 per cent market share in the three months, lower than the 63.4 per cent share it had in the same period last year, amid increasing competition as Air India undergoes a mammoth merger with Vistara.
The airline added 28 jets during the quarter, with its seat capacity rising 8.2 per cent during the period. It sees this capacity for the December quarter increasing by “early double digits” as compared with a year ago period.
The airline also announced its business class product on some key routes in India in August, paving way for its transition from a low-cost carrier to a full-service airline. The premium offering is expected to roll out by the end of this year, it said then.
IndiGo also got a board nod on Friday to invest as much as 2.95 billion rupees ($35.1 million) in IndiGo Ventures Fund, that was approved by local markets regulator this month.
The carrier’s shares have jumped 47 per cent this year, beating India’s benchmark Nifty 50 that has gained 11.3 per cent. The earnings came after market hours Friday.