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New Delhi: The board of directors of InterGlobe Aviation Limited, which operates the country's largest domestic airline IndiGo, has approved raising up to 4,000 crore through a qualified institutions placement, the company said on Monday.

The board of directors "at its meeting held today, i.e., August 10, 2020, has considered and approved the raising of funds for an aggregate amount not exceeding 4,000 crores through an issue of equity shares by way of a qualified institutions placement, in accordance with the relevant provisions of applicable law and subject to approval of the Company's shareholders and receipt of applicable regulatory approvals", the airline said in a stock exchange notification.

QIP is a capital-raising tool through which listed companies can sell shares, fully and partly convertible debentures, or any securities, other than warrants that are convertible into equity shares, to qualified institutional buyers.

Mint had last month reported that IndiGo has hired Citigroup Global Markets and Bank of America (BofA) to advise on its proposed qualified institutional placement (QIP), quoting sources.

The QIP could result in a stake dilution of at least 10% for existing shareholders, including the airline’s promoters, sources had said then.

IndiGo, run by InterGlobe Aviation Ltd, had a market capitalization of 36,667.24 crore on Monday, according to BSE data.

Airlines globally have been hit by the covid-19 pandemic, and the resulting lockdowns and travel curbs as well as fears of contracting infection, which has dented demand. Indian carriers are staring at a revenue loss of 1.3 trillion between fiscal 2020 and 2022 due to the covid-19 pandemic, rating agency Crisil said in a report last month.

IndiGo posted a consolidated net loss of 870.81 crore in the March quarter, from a year-ago profit of 596 crore. This was due to a surge in cost, amid tepid revenue growth, which was compounded by flight restrictions to international sectors that saw a rise in covid-19 cases.

At the company's post result call last month, the airline's chief financial officer Aditya Pande had said the airline's operations weren't being able to off-set its fixed costs though the company managed to bring down its daily cash-burn to 30 crore from 40 crore during the previous quarter.

At the end of 30 June, IndiGo had a total cash balance of 18,449.8 crore comprising 7,527.6 crore of free cash and 10,922.2 crore of restricted cash.

The airline's net debt stood at 23,551.6 crore on 30 June, up 27.8% from the year-ago period.

"We continue to believe that long-term demand and stability in the sector remain (with) key challenges, thus, we remain cautious on the stock," Motilal Oswal Institutional Equities said in a report last month.

Shares of InterGlobe Aviation Ltd closed at 952.90 a piece on the BSE on Monday, up 1.43% from the previous trading day, while the Sensex closed at 38,182.08 points, up 0.37%.

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