By Staff Correspondent
InterGlobe Aviation Limited, which operates India’s largest airline, IndiGo, has reported a record quarterly profit of ₹3,090.6 crore ($416 million) for the quarter ending 30 June, a remarkable turnaround from a loss of ₹1,064.3 crore a year earlier. The results were buoyed by robust demand for air travel, a 13% decline in fuel costs, and favourable foreign currency movements. Total income grew by 32% to ₹17,161 crore.
The airline has announced ambitious plans to leverage its strong liquidity position by investing early in aviation-related companies and acquiring assets such as aircraft and engines. With free cash amounting to ₹15,691 crores, up 89% from the previous quarter, IndiGo is considering a bold change in strategy following a strong recovery from the pandemic’s impact.
Investing In Growth & Diversification
The company’s chief financial officer, Gaurav Negi, stated that IndiGo intends to invest in aircraft and related assets and, subject to regulatory approvals, launch a venture capital arm to invest in early-stage firms within aviation, consumer-focused and allied sectors such as travel, lifestyle, hospitality, and transportation. The initial investment in the venture capital business is projected at ₹7 crore.
Negi said, “Given our large consumer base, we believe these investments will help us add value to the airline.”
Record Traffic & Expanding Fleet
IndiGo’s record quarterly results are accompanied by impressive operational achievements. The airline flew a record 300,000 passengers on a single day in May, with a 30% year-on-year passenger increase in passengers for the quarter of 26.2 million. The airline made history in June by ordering 500 aircraft, taking its total outstanding orders to 980, to be delivered by the middle of the next decade.
The management also reiterated its ambition to expand international operations within the 5-6 hour flying range, including new routes to destinations like Tbilisi, Baku, Tashkent, Almaty, Nairobi, and Jakarta.
Challenges & Outlook
Despite its strong financial performance, the airline faces some headwinds, including issues related to Pratt & Whitney engines, which may require removal from the fleet for inspection, and a recent penalty of ₹30 lakh by the regulator following four tail-strike incidents.
Furthermore, the airline commented on the overlap of around 15-20% of routes affected by the suspension of Go First on 3 May, acknowledging that some slots were received at airports following Go First’s suspension but that clarity is awaited from stakeholders on the status of those slots.
Ambitious Goals For The Future
IndiGo’s positive results reflect a strong rebound in India’s aviation sector as the economy recovers from the impact of the Omicron variant. With a yield of ₹5.18 per km, 1.2% less than the year-ago figure, and average daily air passenger traffic surpassing pre-pandemic levels, the airline has set its sights on doubling its size and scale by the decade’s end. It plans to increase passenger traffic on its network to 100 million in the current financial year, up from 85.6 million in 2022-23.
On the topic of dividends, IndiGo has expressed a desire to return to a positive net worth status before addressing the issue.
The airline’s results and plans for investment and growth reflect the renewed optimism in India’s aviation industry and may set a precedent for other airlines to follow. The ambitious growth strategies and a clear focus on expanding its international footprint position IndiGo strongly as a leading player in the global aviation market.
