IndiGo may post up to 700-cr profit

Mumbai: Operational efficiencies and constant stream of earnings from sale and lease back of aircraft will help Gurgaon-based budget airline IndiGo to post 650-700 crore of gross profit for the financial year ending March 31, said people familiar with the financials of the airline. IndiGo, promoted by InterGlobe Enterprises owned by Rahul Bhatia, is an unlisted company.
This will be the second successive good results posted by the airline as IndiGo earned 550 crore of gross profit in the financial year 2010 with a 25% profit margin. Profit margin refers to a measure of profitability which is calculated by finding the net profit as a percentage of the revenue.
Its margins for the financial year 2011 are expected to be around 18.6% to 20% on revenues of 3,500 crore, the person said.
Driven by robust demand, IndiGo has expanded its market share by nearly 4% compared to its market share in the financial year last year. With the growing demand, the airline has also expanded fleet by adding 10 aircraft, taking its total fleet size to 36.
But industry insiders feel that the profits reflected in IndiGo's balance sheet are not operational profits alone. Most aviation analysts and industry experts say IndiGo's rising profits are due to its sale and lease back income. Sale and lease back is a process where airlines sell aircraft to a leasing firm which then leases aircraft back to the original owner, helping the airlines to save on capital expenditure and improve balance sheet.
28/03/11 Manisha Singhal/Economic Times

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Categories: Indigo Airlines Mar 2011