Friday, May 27, 2022

Why IndiGo Is Losing Money Despite Selling More Tickets In Post-Covid World

Interglobe Aviation - parent of the country's largest budget airline operator - IndiGo - on Wednesday reported that its net loss widened to Rs 1,682 crore in quarter ended March 2022 compared with loss of Rs 1,147 crore in the same quarter last year. The sharp increase in loss came on the back of disruptions caused due to Omicron wave of Coronavirus and surge in aviation turbine fuel (ATF) prices. 

 The fuel prices during the quarter jumped by a whopping 61 per cent annually. The company's aircraft fuel expenses jumped 68 per cent to Rs 3,220 crore from Rs 1,914 crore. 

IndiGo's operating profit or earnings before interest, taxes, depreciation, amortization, and rent costs (EBITDAR) came in at Rs 171.8 crore with EBITDAR margin of 2.1 per cent, compared to EBITDAR of Rs 648.3 crore with EBITDAR margin of 10.4 per cent for the same period last year 

IndiGo's revenue from operations however jumped 29 per cent to Rs 8,021 crore versus Rs 6,223 crore in the year ago period. Its passenger ticket revenue was Rs 6,884 crore, an increase of 38.4 per cent and ancillary revenue was Rs 1,058 crore, an increase of 18.8 per cent compared to the same period last year. 

 Number of passengers increased by 10.3 per cent in March quarter compared to the same period last year. 

 “This quarter has been difficult because of the demand destruction caused by the Omicron virus in the first half. Although traffic rebounded and demand was robust during the latter half of the quarter, we were challenged by high fuel costs and a weakening rupee. We believe IndiGo is best positioned to maximise revenue in a recovering market. As we work to return the airline to profitability, we are focused on maintaining our cost leadership position and continuing to build the most efficient network in the region,” said Ronojoy Dutta, Interglobe Avaiation's CEO.

27/05/22 Abhishek Vasudev/Outlook

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