IndiGo Posts Rs 189 Cr Profit, Warns of Aircraft Grounding

New Delhi, Nov 3 (PTI) IndiGo on Friday reported a net profit of Rs 188.9 crore for the three months ended September as the country's largest airline remained in the black for the fourth straight quarter but cautioned that Pratt & Whitney engine issues will lead to more aircraft grounding in the March quarter of next year.

The bottom line of the airline, which is also expanding its operations internationally, in the latest quarter was boosted by higher traffic, lower foreign exchange losses and increased capacity.

InterGlobe Aviation, the parent of IndiGo, had posted a loss of Rs 1,583.3 crore in the year-ago period, according to a release.

The net profit, excluding foreign exchange loss, stood at Rs 806.1 crore in the latest September quarter.

In the second quarter of the current fiscal, IndiGo's total income jumped 20.6 per cent to Rs 15,502.9 crore. In the same period a year ago, the total income stood at Rs 12,852.3 crore.

For four consecutive quarters, IndiGo has delivered profitable growth demonstrating effective execution of its plans and strategy coupled with strong demand, the release said.

"With our clear strategy and focus on execution, we have completed a full cycle and remained profitable for the last four quarters," IndiGo CEO Pieter Elbers said.

The airline's capacity increased 27.7 per cent in the September quarter, which is "seasonally the weakest quarter", as per the release.

In the latest September quarter, fuel cost declined 6.4 per cent to Rs 5,856 crore compared to the year-ago period.

"Yield declined by 12.4 per cent to Rs 4.44 and load factor improved by 4.1 points to 83.3 per cent," the release said.

During the quarter, the number of passengers rose 33.4 per cent to 26.3 million.

IndiGo said there will be more grounding of aircraft due to the Pratt & Whitney engine issues in the fourth quarter even as it is taking a range of mitigating measures.

At present, around 40 planes of the airline are grounded due to the engine issues, according to a senior airline official.

IndiGo, which had a fleet of 334 aircraft at the end of September, is taking various measures, including taking planes on wet lease, retaining ceo aircraft and also leasing additional ceo planes from the secondary market.

Against the backdrop of powder metal issues flagged by P&W, IndiGo's Chief Financial Officer Gaurav M Negi said that globally, the airline understands that a large number of incremental engines are being removed for shop visits between 2023 and 2026, and a majority of incremental engine removals are planned for 2023 and early 2024.

"Our current estimate is that these accelerated inspections and incremental shop visits will further adversely impact our operational fleet from the fourth quarter (January-March period) onwards, which is post January 2024 and will lead to a higher number of groundings.

"We are in constant touch with our OEM (Originail Equipment Manufacturer) to navigate these challenges," Negi said during an earnings call to discuss the September quarter results.

For the third quarter of this fiscal, the airline has projected capacity in terms of ASKs to increase by around 25 per cent as compared to the third quarter of financial year 2023.

ASK or Available Seat Kilometres is an indicator of capacity.

Meanwhile, Negi said that distance based fuel charge has been imposed on domestic and international services.

"While we remain committed to offer affordable fares to customers a large part of our operating cost is fuel cost necessitating such fare adjustments," he said and added that the airline monitors the area of fuel prices with respect to the fuel charge.

Elbers said the fuel charge was introduced as a way to mitigate rising fuel prices.

At the end of September, IndiGo's total cash balance stood at Rs 30,665.8 crore and had a fleet of 334 planes.

In September, IndiGo's domestic market share stood at 63.4 per cent, according to latest official data.

Shares of IndiGo gained nearly 1 per cent to close at Rs 2,509 apiece on the BSE.