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Motilal Oswal Report
IndiGo reported higher yield than estimate at Rs 4.53 (up 11.1% YoY) versus our estimate of Rs 3.7.
Yield was stronger on the higher base of last year (the quarter of Jet Airways’ demise), aided by fare bands imposed by the Ministry of Civil Aviation. However, the company is of the view that fare caps on domestic travel should be removed as early as possible.
IndiGo had cash burn of Rs 400 million amid the crisis, which reduced to Rs 300 million as of June 30, most of the reduction coming out of employee costs. The company has undertaken cost-reduction initiatives for leasing, payroll, and other costs.
Considering the above-mentioned efforts are realised and cash burn per quarter decreases along with increase in capacity utilisation (available seat kilometre guidance for Q2/Q3 FY21 is at 40%/50–70% of previous year’s respective quarters), we have built-in loss of Rs 62.7 billion in FY21, with breakeven expected in Q2 FY22.
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