Indigo Q4 Result | Net loss widens to Rs 1,681.80 crore as fuel expenses surge

IndiGo Airlines.

InterGlobe Aviation, the operator of India’s largest airline IndiGo, on May 25 reported a consolidated net loss of Rs 1,681.80 crore for the quarter ended March 2022 (Q4FY22), due to a surge in aircraft fuel expenses.

The company had posted a net loss of Rs 1141.98 crore in the corresponding quarter of the previous fiscal. A Bloomberg poll had estimated a quarterly net loss of Rs 978.30 crore on revenue of Rs 8.000.30 crore for the quarter under review.

Revenue of the company jumped 29% from a year ago to Rs 8,020.75 crore versus Rs 6,222.95 crore logged in the same quarter last year. Its passenger ticket revenues came in at Rs 6,884.70 crore, up 38.4% while ancillary revenues stood at Rs 1,058.30 crore, up 18.8% compared to the same period last fiscal.

Fuel expenses surged over 68% to Rs 3,220.58 crore against Rs 1,914.46 crore a year ago. Overall costs; however, rose 32% to Rs 9,885 crore during the same period.

So far this year, Brent crude has surged 50% while in the March quarter it gained nearly 39%.

Operating profit margin contracted sharply to 2.1% in the quarter from 10.4% a year ago.

"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", said Ronojoy Dutta, CEO of Indigo.

Dutta further said that the company believes 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”, the CEO added.

The airline’s fleet, comprising 41 A320ceos, 143 A320neos, 56 A321neos, and 35 ATRs, operated a peak of 1,577 daily flights, including non-scheduled flights, during the quarter.

The firm said it sees the first quarter of the fiscal year 2023 capacity to increase by around 150% while for the whole fiscal, it expects capacity to increase by around 55-60%.

As of 31 March, IndiGo had a total cash balance of Rs 18,227.5 crore, while the airline’s total debt (including the capitalised operating lease liability) stood at Rs 36,877.80 crore.

"We will turn cautious on the aviation sector if the Russia-Ukraine war prolongs and propels crude oil rally above $110/bbl, as it can overshadow containment of COVID-19", said an analyst on the condition of anonymity.

"Tata Group airlines (Air India-Alliance Air-Vistara-Air Asia) can pose a challenge to IndiGo's leadership, as February 2022 data indicates IndiGo market share fell to 51% vs 55% in CY21 while Tata Group airlines’ combined market share improved to 28% vs 25% in CY21", the analyst added.