Top Asia Budget Carrier Sees 40% Capacity Drop This Quarter
(Bloomberg) -- IndiGo expects passenger carrying capacity to slump 40% in the current quarter, showing that even India’s biggest airline can’t escape the coronavirus pandemic and a near shutdown in international air travel.
- IndiGo, operated by InterGlobe Aviation Ltd., posted a loss of 11.95 billion rupees ($161 million) for the three months ended Sept. 30. The deficit widened from 10.7 billion rupees in the year earlier period when it suffered foreign-exchange losses, a reassessment of future maintenance costs and muted passenger traffic growth.
- IndiGo is the world’s biggest customer for Airbus SE’s best-selling A320neo jets. Airlines around the world have deferred or canceled plane orders, forcing Airbus and Boeing Co. to cut production rates and thousands of jobs.
- India has allowed local airlines to fly limited schedules since May after two months of a strict nationwide lockdown, gradually opening up the domestic market. IndiGo, which has a market share of close to 60%, still couldn’t fill a third of its seats in September, data from the country’s aviation regulator showed.
- Yield -- a measure of fares -- rose 8.9% to 3.83 rupees, the airline said in a statement to stock exchanges on Thursday.
- Yields will remain under pressure as a government cap on fares stays in force until late November, according to Bloomberg Intelligence. IndiGo may face persistent losses as it tries to recover, with maintenance costs for engines and older jets potentially eclipsing savings from lower plane usage, cheaper fuel and job cuts, BI analysts James Teo and Chris Muckensturm wrote Tuesday.
- IndiGo, Asia’s biggest budget airline by market value, is one of the few carriers in the world with enough cash to sustain months of losses. Its total cash was 179.3 billion rupees as of Sept. 30, and total debt stood at 254.2 billion rupees.
- IndiGo shares closed 2.9% higher at 1,330.90 rupees in Mumbai ahead of the results on Thursday. They are little changed this year, while a Bloomberg gauge of major airline stocks has slumped more than 40%.
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