Moneycontrol
Last Updated : Jun 02, 2020 07:06 PM IST | Source: Moneycontrol.com

Up against COVID-19 disruption, IndiGo goes into a quarterly mode

In a step that will help it save costs, the airline now plans to quarterly take stock on its schedule, hiring and fleet expansion.

 
 
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Faced with the disruption caused by COVID-19 outbreak, IndiGo has changed the way it plans its resources. It has done away with annual plans, and is instead taking stock every three months.

This will effect every aspect of its operations - from planning flight schedule and hiring, to fleet expansion and negotiations with lessors.

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Pointing out that airlines all over the world usually make annual plans, CEO Ronojoy Dutta said that the carrier is changing tack. He was speaking to analysts shortly after the country's largest airline announced a loss of Rs 870 crore in its fourth quarter ending March 2020.

IndiGo had resumed operations on May 25 after two months of grounding due to the nationwide lockdown. While the government has allowed airlines to operate one-third of their summer schedule after the resumption, most of the airlines are operating at lower capacity.

Dutta said the airline is at present operating at 20 percent of its capacity, which will be ramped up to 30 percent and later to 50 to 60 percent. "These are now quarterly decisions," Dutta said.

Also Read | IndiGo, AirAsia have started giving ticket refunds in travel agents' accounts: EaseMyTrip.com

The airline had announced a pay cut of 5 to 25 percent across its staff - except for those with low salaries -  and had also sent employees on leave without pay from May to July. Dutta, however, didn't specify the proportion of employees.  He added that all merit-based hikes and allowances have been put on hold.

The airline had added just five aircraft to its fleet in the last quarter of the 2020 fiscal, slowing down from the earlier rate of adding one plane per week. While IndiGo hasn't given a guidance to capacity addition in the present financial year, the focus will be on negotiating better deals with the lessors.

Also Read: International flight resumption | No government nod yet, but airlines continue to accept bookings

The airline is in talks with its lessors to freeze payment of supplemental rentals. These are payments in addition to the basic rentals. 

The Gurugram-based airline is also negotiating with its other vendors to get more favourable terms, and will also not pay dividend for the year. Put together, these steps will help the airline save up to Rs 4,000 crore in the first nine months of the financial year. 

The airline, which had recently got an extension from industry regulator DGCA to replace faulty engines in its Airbus 320Neo aircraft, said it plans to return 120 of its A320 Ceo planes in the next two years. 

Dutta reasoned that this will help the airline save on high maintenance and fuel costs that the Ceo aircraft incur. 

At present the airline has a fleet of 282 aircraft, including 123 ceos and 100 neos. About 40 of the Neo aircraft are at present grounded because of faulty engines.

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First Published on Jun 2, 2020 06:59 pm
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