IndiGo, the leading Indian airline, reported a significant turnaround in its financial performance during the July-September 2023 quarter.
The company achieved a profit of Rs 189 crore, marking a substantial improvement from the loss of Rs 1,583 crore in the same quarter the previous year. This performance defied market expectations, as Bloomberg had anticipated a net loss of Rs 316 crore. The factors contributing to this success included a sharp increase in the number of passengers, improved seat occupancy rates, and lower fuel costs.
IndiGo's passenger numbers increased by 33% year-on-year, reaching 26.3 million, and the company's passenger ticket revenues for the quarter amounted to Rs 13,069 crore, reflecting a 17.6% increase. Ancillary revenues also saw a 21% increase compared to the same period last year, reaching Rs 1,551 crore.
The company's consolidated revenue from operations for the September quarter reached Rs 14,944 crore, a 20% year-on-year increase, surpassing the Bloomberg estimate of Rs 14,885 crore.
IndiGo's EBITDAR margin soared to 16.4% in the latest quarter, a significant improvement from the 1.8% margin recorded in the same quarter of the previous year.
During the September quarter, IndiGo managed to reduce its cost of available seat kilometer (CASK) by 27% and experienced a 6.4% reduction in fuel costs, which accounted for 38% of the company's total expenses. These cost-saving measures significantly bolstered the company's cash reserves, which reached Rs 30,665 crore by the end of the September quarter.
However, IndiGo is also facing challenges related to power metal issues in its engines from Pratt & Whitney (P&W). This issue is expected to result in a significant number of incremental engine removals for shop visits between 2023 and 2026, with a majority planned for 2023 and early 2024. This may lead to a higher number of groundings and additional operating challenges.
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IndiGo's fleet comprises a total of 334 aircraft, marking a 20% year-on-year increase. The company added a net increase of 18 passenger aircraft during the quarter. IndiGo operated at its peak with 1,958 daily flights during the quarter, serving both domestic and international destinations.
The company's CEO, Pieter Elbers, emphasized their commitment to expansion, adding 10 new destinations in recent months, bringing the total number of destinations to 115.
Financially, IndiGo maintained a total cash balance of Rs 30,665.8 crore as of September 30, 2023, comprising both free and restricted cash. The company's total debt, which includes capitalized operating lease liability, stood at Rs 49,391.7 crore, reflecting its financial position at that time.
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