Saturday, June 12, 2021

India’s biggest domestic airline braces for third Covid-19 wave

New Delhi: India’s largest domestic airline says it is building a war chest of more than $1bn as it prepares for a third wave of Covid-19 infections, just as a brutal nationwide outbreak begins to recede.

Ronojoy Dutta, chief executive of IndiGo Airlines parent InterGlobe Aviation, told the Financial Times he hoped the carrier’s business would return to pre-pandemic levels by the end of the year but warned that another wave of coronavirus in November could cause more disruption.

The budget airline plans to raise Rs30bn ($410m) through a qualified institutional placement, an equity raising tool used in India, to prepare for a worst-case scenario. IndiGo also plans to source approximately $600m through bank credit and sales and leasebacks of aircraft.

“The doctors tell us there will be a third wave. There are no ifs and buts about it, and it will probably come around November, December,” said Dutta.

“The board says ‘look, the environment is volatile . . . What if we go for another three months’ shutdown, then what? And the revenue is zero?’ It’s for that sort of disaster scenario that we are building insurance,” he added.

India’s aviation sector has been punished by regional lockdowns across the country. IndiGo’s passenger capacity dropped from 80 per cent in February to 30 per cent in mid-May.

InterGlobe, which has a market share of more than 50 per cent, this month reported its fifth straight quarterly loss.

However, Dutta said that a third wave was unlikely to be as damaging as the second one. “As long as [India keeps] vaccinating about 700,000 people a day . . . it will be a very flat wave,” he said.

He also expects IndiGo to benefit from Indians taking “revenge vacations” after being restricted to their homes for months, adding that the company has added new routes to holiday hotspots such as the Maldives.

The pandemic “has set India back at least two, three years”, said Dutta. “But we’ll catch up . . . I have great faith in the Indian growth story.”

12/06/21 Stephanie Findlay/Financial Times

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