Mumbai: India’s largest domestic carrier, IndiGo, expects ticket bookings in the 0-15 day window, considered a key revenue-earning window for airlines, to remain weak and add pressure to unit revenues of the airline during the quarter that ends of September 30, the airline’s chief executive Ronojoy Dutta told analysts at a call last week, according to the transcription of the call that was released on Thursday.
“Unfortunately, we are witnessing some lower fares in the 0-day to 15-day booking window and expect this to add some pressure to our unit revenues in the second quarter," Dutta said.
“On our capacity guidance, we expect a year-over-year capacity increase in terms of ASKs of 28% for the second quarter of this fiscal year. For the full year, we expect capacity increase of 30%," Dutta added.
ASK or available seat kilometer is a measure of passenger carrying capacity of an airline. It is equal to the number of seats available multiplied by the number of miles or kilometers flown by the airline.
“As you said, we're seeing some softness in the 0-day to 15-day window, and it's hard to say whether that's just seasonal or that's an annual cyclical effect," airline’s chief financial officer Rohit Philip added.
The airline also plans to use ‘excess cash’ to start outright aircraft purchases in addition to supplement the sale-and-leaseback model that the airline used to purchase majority of aircraft in its fleet.
“We consider the optimal cash balance or minimum cash balance that we need to maintain roughly 15% of revenues, which roughly becomes about ₹4,500 crore," chief financial officer Rohit Philip told analysts during the call. “We're looking at all the options based on the aircraft deliveries that we have as to what's the optimal way to utilize them to buy some of the aircraft with cash," Philip added.
InterGlobe Aviation Ltd, which operates India’s largest airline, IndiGo, last week reported its highest-ever quarterly profits, benefiting from the collapse of Jet Airways and showing resilience in the face of a bitter confrontation between founder Rahul Bhatia and his estranged partner Rakesh Gangwal.
IndiGo’s net profit stood at ₹1,203 crore in the quarter ended June, an almost 43-fold jump from the measly ₹27 crore in the corresponding quarter last year. The airline’s chief executive officer, Ronojoy Dutta, said the surge in net profit was due to strong passenger revenues and a sharp improvement in cargo performance.
Meanwhile, IndiGo’s cash balance at the end of 30 June 2019 stood at ₹17, 300 crore, comprising of ₹7, 700 crore of free cash and ₹9,600 crore of restricted cash, the company’s chief financial officer Philip said during the analyst call.
“The capitalized lease liability, as of June 30, 2019, was ₹16, 100 crore. Our total debt, including the capitalized lease liability, was ₹18, 400 crore," Philip added.
Going ahead, the airline’s capacity is expected to grow at 30% per annum.
“So, our growth plan is set. We're going to grow at 30% a year," Dutta added.
IndiGo, which benefited from the grounding of Jet Airways, received about 30% of Jet Airways’ available domestic slots at Mumbai and Delhi airports, which consisted of about 150 arrival and departure slots each.
“And out of these slots, we have got about 30% of the slots. We would have expected more because our market share is 50%, but that's where we stand at this point of time," Wolfgang Prockschauer, president and Chief Operating Officer (COO) at IndiGo told analysts during the call.
“And we'll see how it goes further when we move into September/October. We definitely expect more out of these slots to be available, both in terms of more slots becoming available, specifically Delhi, who has not given all the slots for certain reasons, and also Mumbai," Prockschauer added.
On the international front, IndiGo received 12 departures slots daily, which was earlier allocated to Jet Airways.
“And out of this 12, we have made operational and already gone for sale on seven of that and remaining are still open because of slot issues, we're having also again in major airports here in India," Prockschauer said.
“And then, going further, after there is more clarity about what's happening to Jet Airways, we will also expect a major boost to our portfolio in domestic and international slots, and the traffic rights, especially," Prockschauer added.
Also read: IndiGo founders said to ready compromise deal