Thursday, October 25, 2018

Now, India’s largest airline joins the loss-makers’ club

On Wednesday (Oct. 24), IndiGo, India’s largest airline company by market share, reported losses for the first time since its listing three years ago.
For the quarter ended September, losses at InterGlobe Aviation, which runs and operates IndiGo, stood at Rs652 crore ($89.1 million), as per a filing with the BSE. In the same quarter last year, it had posted a profit of Rs551.6 crore.
The airline posted losses despite its revenue increasing 17% to Rs6,185 crore on the back of higher passengers flown. Though it flew more passengers, it made less money as it was unable to pass on the effects of rising costs to consumers, given the competitive environment.
“High fuel cost, rupee depreciation, and intense competition significantly impacted profitability,” the company stated. Its fuel spend alone surged 84% year-on-year to Rs3,035.50 crore during the July-September period.
The weakened finances have forced the company to change its plans for the immediate future.
IndiGo is now reviewing its aircraft purchase decisions. IndiGo earlier had plans to buy some A320neo aircraft but has now put off the decision to save cash. “At times when there is a little uncertainty we want to be prudent with cash, so right now we are holding off buying any A320s…,” Bhatia said during an analyst call.
IndiGo is only the latest Indian airline to face headwinds.

In the April-June quarter, both Jet Airways and SpiceJet had posted losses owing to rising fuel costs and a depreciating rupee. IndiGo’s profits had also nosedived 97% in the period.
25/10/18 Kamalika Ghosh/Quartz

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