IndiGo Airlines, swung back into profits for the three month period-ending December 31, 2021, after successive loss-making quarters, on the back of buoyant festival season bookings and receding impact of Covid. The airlines reported a profit after tax of ₹130 crore for October - December period, against a loss of ₹620 crore in the corresponding quarter last fiscal.

The company management, in their post earnings call, however indicated that there could be some impact of Omicron in Q4FY22 as passenger numbers declined for the first two weeks into January (from mid-December).

For the reporting quarter, IndiGo posted an 89 per cent y-o-y jump in revenue from operations to ₹9,294.8 crore (against ₹4,910 crore); as revenue per available seat kilometer (RASK) - a financial metric comparing operating efficiencies of airlines - improved to ₹4.09, up 25 per cent, from ₹3.27 crore in the year-ago-period.

The airlines saw its yield - rupee earned for each passenger kilometer flown – improved over 19 per cent y-o-y to 4.41. Yield is considered to be measure of fares and pricing power.

Improved numbers saw the airlines report a total cash balance of ₹17,318.9 crore; which include ₹7,814.1 crore of free cash; and ₹9,504.8 crore of restricted cash. Buouyed by the numbers, IndiGo CEO, Ronojoy Dutta, said during the post earnings concall that “liquidity is improving”.

Analysts say that it is unlikely that the airlines will actively pursue its QIP plans at the moment.

However, for IndiGo, fuel cost saw an 186 per cent y-o-y increase to ₹3,269.3 crore (₹1,142.9 crore), while cost of available kilometer (CASK) –unit cost expressed in cash value to operate each seat for every kilometre - increased by approximately 10 per cent to 4.03 (3.68) for the quarter under review. A lower CASK value means it is easier to earn revenue.

“It (profits) demonstrates that our business model is fundamentally strong,” Dutta said.

Board Appointment

Meanwhile, the Board of Directors of InterGlobe Aviation (holding company of IndiGo) approved the appointment of its co-founder and promoter, Rahul Bhatia, as its Managing Director with immediate effect. His agenda would be expanding the airline’s presence in India and in international markets and building for the long term.

“Our (IndiGo’s) initiative into cargo, and the entire digitisation in the last couple of years were spearheaded by Rahul (Bhatia). We are now entering a new phase in our journey, with more international and long-haul flights. In this evolving and exciting environment, strengthening the thought leadership in the company is a timely and welcome move,” the airline CEO added.