InterGlobe Aviation is shifting into the red

After posting profits for seven consecutive quarters, InterGlobe Aviation fell into the red, posting a net loss of ₹986 crore in the September-end quarter.

In the same period last year, the company that operates India’s largest domestic airline, IndiGo, announced a net profit of 188 billion rupees.

Airline management blamed seasonality, temporary headwinds such as groundings, and inflationary pressure for its poor performance. Total expenses rose 22 per cent year-on-year to ₹18,666 crore.

Increasing competition, especially on international routes, also affected yields. Load factors remained constant at 82.6 percent. Revenue from operations increased by 13.6 per cent year-on-year to ₹16,969 billion, while deployed capacity increased by over 8 per cent. This is much slower than recorded last year and contributed to revenue growth of approximately 20 percent in the second quarter of last year. While the airline is seeing an increase in demand due to the festive season, it may see a decrease in revenue compared to last year.

Gaurav Negi, the airline’s Chief Financial Officer, said the expenses were higher due to various factors such as increased value added tax on aviation fuel, increased fuel consumption due to increased congestion at airports, increase in aircraft charter rentals.

On the positive side, the number of grounded aircraft has dropped from the mid-70s to the low 60s. It is planned to reduce the number of grounded aircraft to around 40 by next March. This is expected to alleviate some of the cost pressures as the airline will be able to return some of its leased aircraft.

“We continue to benefit from the growth of the Indian market and related opportunities and at the same time remain the cost leader in this competitive market,” said CEO Pieter Elbers.

new destinations

Elbers announced that IndiGo will soon start flights to five new destinations in Malaysia this year, including Penang and Langkawi.

Due to the strong demand for international travel, the airline is preparing to increase the capacity deployed on international routes to 30 percent of the total from the current 28 percent.