IndiGo Airline’s losses widened in the April-June quarter as the second wave of Covid-19 and lockdowns reduced passenger traffic and a rise in crude-oil prices increased operational costs.
The budget carrier’s parent organization, InterGlobe Aviation, announced a net loss of 31.74 billion rupees (US$ 426 million) in the first quarter, as against 28.49 billion rupees ($382 million) in the same period last year. In the preceding January-March quarter, IndiGo had posted a loss of 11.59 billion rupees. It also missed Street expectations as most analysts had expected a net loss in the range of 25-27 billion rupees.
“The country was under a severe impact of the second wave of Covid-19,” the company said. “As a result, all state governments reintroduced measures including lockdown to curtail the spread of the virus. This has led to a significant drop in air passenger traffic, thereby severely impacting our revenues and profitability for the quarter.”
During that quarter, the airline clocked revenue of 30 billion rupees, which is 51.6% less than the preceding quarter (62.23 billion rupees). However, it is 292% higher than the revenue in the year-previous quarter (7.66 billion rupees), as last year the Indian government had imposed a flight ban in the April-May period to curb the spread of the virus.
The airline’s fuel costs surged 854% to 12.16 billion rupees as against the year-before quarter. On a per -iter basis, it surged 67.3% from last year. During the quarter the average aviation turbine fuel costs increased by around 97% year-on-year and 12% against the March quarter.
IndiGo’s total debt ballooned 35% to 316.9 billion rupees from 235.5 billion rupees reported last year. At the end of the June quarter, the airline’s free cash balance declined 25% to 56.2 billion rupees, from 75.27 billion rupees in the year-ago period.
After domestic flights resumed on May 25 last year, the airlines were seeing a gradual rise in passenger traffic and this lasted until February this year. Once the second wave of Covid-19 pandemic gripped the country the state governments began imposing localized lockdowns.
According to the aviation watchdog Directorate General of Civil Aviation, the country’s domestic air traffic in April was 5.72 million passengers and it plunged to 2.1 million in May as the second wave peaked with the daily coronavirus cases crossing 400,000 on some days.
There was some improvement in June when it increased to 3.1 million passengers. However, during these months IndiGo maintained its leadership position by garnering over 50% market share.
As part of Covid-19 safety measures, the airlines were directed to set their capacity limit. The demand was also low, as people were taking flights only for emergencies. IndiGo had rolled out discounts for passengers who have received at least one dose each of Covid-19 vaccine.
Although India’s civil aviation industry has been reeling under the Covid-19 impact since last March, the government has so far not provided any financial assistance to the sector.
Almost all airlines have been reporting losses and they are either laying off or furloughing employees to salvage their weak balance sheets. According to International Air Transport Association, India may lose around three million jobs in aviation and related sectors during this year.