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IndiGo clocks ₹2,998 crore PAT, beats street – today news

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Total income during the period rose 30.2% from a year earlier to 20,062.3 crore. The December quarter is typically the strongest quarter for the travel industry on account of the holiday season.

The airline has now been able to report a net profit over five straight quarters since October-December 2022.

“With these five consecutive quarters of profit we continue to recover from the losses of covid and have now become net worth positive again,” chief executive officer Pieter Elbers said.

The airline added 24 aircraft during the December quarter, taking the total fleet size to 358 as of December. IndiGo expects capacity growth of 12% in the March quarter as compared to the same period a year ago. For April-March 2024-25, the company’s management plans to induct at least an aircraft every week despite the supply chain issues in the availability of engines from US-based manufacturer Pratt & Whitney.

“The near-term bottleneck is aircraft on ground (AOG). The current AOG count is mid-70s…we are working with Pratt & Whitney on spare engines availability and hope that the situation will start to improve in a few quarters,” the company’s chief financial officer Gaurav Negi said in the post-earnings conference call with analysts.

In order to ensure capacity addition, the airline has retained old aircraft via lease extensions and is also procuring additional aircraft on damp and secondary dry leases. In a damp lease, an airline secures aircraft from a lessor along with some of the crew. In a dry lease, the owner provides the aircraft to the lessee without a crew.

The airline, which had already grounded 40 aircraft due to earlier issues in Pratt & Whitney engines, has grounded more aircraft in January due to inspection requirements for the powder metal issue. In July, Pratt & Whitney said it needs to inspect 1,200 engines worldwide to assess an issue around the metal used in manufacturing the parts of a PW-1100G engine.

IndiGo operates 150 of these aircraft, though it is not clear how many of them will be affected. The duration could be from 250 days to 300 days for inspection to be carried out for all the engines that are going to be recalled.

Given the constraints in capacity, the airline expects yields to be on the higher side, another positive for the airline.

“Capacity and supply situation will be the driver. Despite the (capacity) addition, demand is very strong, as a result the loads are also high, we expect yields to be on the stronger side,” Negi added.

With a free cash of 19,199.6 crore, the company has stated its plans to continue spending on owning engines and aircraft. The airline now has 26 aircraft either owned or on finance lease, up from 16 aircraft in September.

The total expenditure rose 22% to 17,063.7 crore, with fuel expenses accounting for 40% of the total spend at 6,841.4 crore, up 18%. Yield, or revenue earned per paying passenger flown per kilometre (km), was at 5.48 per km, 2% higher than the year-ago period.

The airline, which had imposed a fuel surcharge of 300-1,000 on airfares, recalled it during the quarter but said that is continues to monitor the fuel prices.

“Given the dynamic nature of fuel price and quantum of impact of fuel price on our operating expenses, we continue to monitor the fuel price very closely and will take corrective measure as and when needed,” Negi said.

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Published: 03 Feb 2024, 12:12 AM IST



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