IndiGo Q4 profit surges 5-fold to Rs 590 cr amid Jet Airways turbulence

(Eds: Adding more quotes) Mumbai, May 27 (PTI) IndiGo's parent InterGlobe Aviation Monday posted a five-fold jump in profit after tax to Rs 589.6 crore in the three months ended March as higher passenger revenues and cancellation of Jet Airways flights helped boost its bottomline. IndiGo CEO Ronojoy Dutta said Jet Airways grounding also helped the carrier improve its revenue performance in the fag end of February and in entire March with the developments effectively increasing its revenue by 3-4 per cent during the whole quarter. The company had a net profit of Rs 117.6 crore in the March quarter of 2018. On the reported feud between the two promoters --Rahul Bhatia and Rakesh Gangwal-- Dutta reiterated that there are no "differences" on the strategy or international strategy or management selection. "There is one issue that we are debating right now and we are very optimistic that we will resolve that very shortly," he said. IndiGo, the country's largest airline with a nearly 50 per cent domestic market share, plans to have 30 per cent more capacity this fiscal. Half of this capacity would be added on domestic routes and the rest 50 per cent on international routes, Dutta said during a call with analysts Monday. As many as 53 narrow body and and 11 ATRs are expected to be delivered to the carrier through next fiscal, he said, adding that at the same time some of the planes will be going out of the fleet. The carrier's total income rose by 35.5 per cent to Rs 8,259.8 crore in the latest March quarter from Rs 6,097.7 crore in the year-ago period. However, net profit for the 2018-19 fiscal plunged 93 per cent to Rs 156.1 crore. In the comparable period, the same stood at Rs 2,242.4 crore and the fall was on account of higher fuel cost and currency fluctuation, among other factors. "Fiscal 2019 was a tough year for the airline industry in India because of high fuel prices, weak rupee and intense competitive environment. "However, it is a tale of two halves for IndiGo, with the first half of the year incurring losses and the second half of the year experiencing a sharp recovery," Dutta said. IndiGo sees plenty of opportunities for profitable growth in its network and with a robust delivery stream of new aircraft, he said, adding, "we are well positioned to capitalise on this growth". "Our April revenue is stronger even during March due to the temporary suspension of Jet Airways. By May, however, as the industry has added capacity in the Jet market, this effect has started to disappear. "And by June, I think, the effect will pretty much disappear except in the few international markets, where we overlap with Jet like in the Middle-East," he said. Dutta, however, said that the capacity was added "too late" in the day, without the full benefit of 90-day window, therefore the most painful impact is in June in the metro to metro market, whose fares have come down quite appreciatively. For the latest March quarter, passenger ticket revenue was up 40.2 per cent at Rs 7,037.30 crore and ancillary revenue was Rs 826.40 crore, an increase of 24.1 per cent compared to the same period last year. Fuel cost was up 19 per cent to Rs 278.13 crore during the March quarter from Rs 233.77 crore in the period year ago. Dutta said IndiGo along with other domestic carriers were in "discussions" with the government for availing overseas flying rights of the grounded Jet Airways. "Several discussions are going on with authorities, everyone is applying for some of those slots but we cannot fly them until the ministry approves them. "It is a two-step process as after we get the nod, we have to start the slot process again with the respective airport operators," he said. According to him, IndiGo would set up a buddhist circuit connecting Gaya, Varanasi and Gorakhpur with New Delhi and Kolkata besides connecting all major cities of the North East region with Kolkata and Guwahati. "We are developing a plan to connect tier 2 to tier 3 (cities) without going to a metro city," he added. The airline's Chief Financial Officer Rohit Philip said there would be roughly a lease liability of Rs 140 billion (Rs 14,000 crore) and corresponding asset of Rs 130 billion (Rs 13,000 crore) on the balance sheet due to Indian Accounting Standard (Ind AS) 116. "That will be the balance sheet impact. On the P&L (Profit & Loss) side for FY20, we would expect roughly to be neutral," he added. Ind AS 116 came into effect from April 1 and pertains to principles for recognition, presentation and disclosure of leases. IndiGo's Chief Operating Officer Wolfgang Prock-Schaue said most of the issues relating to the Pratt & Whitney (P&W) engines that power its A320 neo planes have been resolved. "We along with the manufacturer are now focusing on two issues. One of them will be resolved by June and other by December," he said. Regarding shortage of pilots, he said IndiGo has inducted 285 pilots from grounded Jet Airways. They would be online in the next 3-6 months while some more are expected to join the carrier, he added. "Looking forward, we would have sufficient number of pilots to execute our expansion plan," he noted. At the end of March, total debt was Rs 2,429.2 crore and a fleet of 217 planes. It operated a peak of 1,376 daily flights during the quarter. PTI DSP IAS RAM MRMR