IndiGo on Friday posted a consolidated net profit of Rs 2,728.8 crore for the first quarter of 2023-24 (FY24), which is 11.7 per cent lower than the corresponding period last year, primarily due to rising fuel costs, a few states increasing value-added tax on fuel, higher forex rates, and an increase in maintenance expenses due to grounded aircraft. This is the first time after six quarters that India’s largest airline has posted a decline in its consolidated net profit.
However, it must be noted that the profit in Q1 of 2024 was still the second-highest ever quarterly net profit posted by India’s largest carrier. IndiGo had recorded its highest-ever quarterly consolidated net profit at Rs 3,090.6 crore in the first quarter of 2022-23 (FY23).
In the post-results investor concall, the airline’s chief executive officer Pieter Elbers stated that while there were certain issues due to high fuel costs, rising forex rates, grounded planes and certain global issues, the margin of Rs 2,278.8 crore — which is about 14 per cent of the total income earned — is a solid one.
The airline earned a total income of Rs 20,248.9 crore in the first quarter of FY24, recording a growth of 18 per cent year-on-year (Y-o-Y). However, its total expenses increased more at 24 per cent Y-o-Y to Rs 17,444.9 crore.
The airline’s chief financial officer Gaurav Negi said that about 70 IndiGo planes are currently grounded. The airline had 382 planes in its fleet as of June 30. About 70 planes are currently grounded due to issues with Pratt and Whitney engines.
The airline has started receiving compensation from Pratt and Whitney for the grounded planes. The compensation that the airline has received in Q1 also includes the compensation for Q3 and Q4 of the last financial year, Negi explained.
Negi also mentioned that for the rest of the financial year, the airline is expecting to grow its capacity in early double digits (10-15 per cent) through various “mitigation” measures such as getting more planes on damp leases, increasing the lease period of existing planes, etc. He also mentioned that the airline is planning to lease B737 Max planes from Qatar Airways to mitigate capacity shortage.
The number of A320ceo planes, the older generation A320 family planes that are less fuel-efficient, in its fleet has increased from 31 on March 31 to 28 on June 30. Negi mentioned that the number of A320ceo planes have increased as they have been leased for a short duration as a part of mitigation measures.
He stated that the maintenance costs have gone up due to high inflation in Europe and the US, where certain maintenance operators are situated. Moreover, certain Indian states, which had earlier reduced the value-added tax on aviation turbine fuel (ATF), have now increased them. The fuel costs for the airline increased by 22.7 per cent Y-o-Y to Rs 6,416.5 crore in Q1 of FY24. ATF costs comprise about 40 per cent of the airline’s total expense.
Elbers said the demand outlook for the remaining part of the financial year remains stable even as there have been some fluctuations here and there. “We are confident about stable revenues as the operating environment in India is sustainable,” he noted.
Elbers stated that the airline is right now testing in-flight entertainment on the customer’s personal devices through the IndiGo app. “We are getting good feedback. Once we feel the need, we can take a call to roll the in-flight entertainment on a much broader scale,” he added.
First Published: Jul 26 2024 | 7:51 PM IST
