In corresponding Q1 of last fiscal, IndiGo had reported its highest ever quarterly profit of Rs 1,203 crore mainly on account of higher fares following the collapse of Jet Airways. IndiGo CEO Ronojoy Dutta described the corona impact as “the aviation industry going through a crisis of survival.” The airline’s scrip closed 0.4% lower at Rs 909.80 on BSE on Wednesday when the broader market was down by 1.1%.
Schedule domestic flights were suspended on March 25 and international a couple of days before that. While domestic flights were allowed to partially resume from May 25, they are operating at only about 30% capacity and schedule international operations are yet to restart.
Accordingly, IndiGo saw its operating revenue fall 92% to Rs 766.7 crore this Q1 from Rs 9,420 crore, against a 90.9% reduction in capacity, compared to same period last year. While operations came a virtual standstill for almost two months, the fixed cost of 274 aircraft was to be borne leading to a daily loss of Rs 31.2 crore in Q1.
IndiGo still remains the best placed to survive the most grievous threat to the aviation industry posed by the pandemic with a “strong balance sheet with a total cash of Rs 18,449.8 crore, including free cash of Rs 7527.6 crore.”
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IndiGo CEO Ronojoy Dutta said: “The aviation industry is going through a crisis of survival and therefore, our cash balance remains our number one priority. However, we also recognise that major disruptions offer companies opportunities for improvement in product, customer preference, costs and employee engagement. We have built a strong team which is working on multiple fronts to ensure that we emerge from this crisis stronger than ever.”
The airline’s total income fell 88% from Rs 9,787 crore last Q1 to Rs 1,144 crore this time.
“Our operations have been severely impacted due to the Covid-19 pandemic. The government of India declared a national lockdown with effect from March 24, 2020, and hence our scheduled operations were halted till May 24, 2020. Several state governments continue to restrict flight operations which impact our operations. As a result, our revenues were materially impacted during this period. Government allowed partial resumption of flights from May 25 and we resumed with much fewer flights. We however continued to incur committed expenditure with respect to our employees, aircraft related expenditures such as lease rentals and other expenditures. This has significantly impacted our profitability,” Dutta said.
“We have taken several actions to mitigate the effect of Covid-19 on our business. We have taken steps to reduce our unit costs and increase our liquidity by making our fleet more efficient with continuing to substitute older CEO aircraft with NEO’s, prioritizing flying with our NEOs over older CEO, putting on hold discretionary expenses, deferring certain capital expenditures, etc. In order to sustain operations, we also had to take actions to cut employee costs through pay cuts, leave without pay and reduction in workforce,” the CEO added.
IndiGo has gone in for pay cuts, leave without pay and is laying off 10% of its almost 25,000 workforce.