IndiGo Q1 PAT down 97% on rising fuel costs

IndiGo Q1 PAT down 97% on escalating fuel costs

Missing Street estimates largely, the country's largest carrier, IndiGo, recorded Monday one of its worst performances quarterly for more than three years. 97% of the year at Rs 27.8 crore during the period from April to June. The airline also saw its yields fall 5.4% to 3.62 Rs against 3.83 Rs in the corresponding quarter of last year, with fuel costs up 54.4% for the quarter at Rs 2,715.6 crore. Operating revenue increased 13.2% year on year to Rs 6.512 crore

Earnings before interest, taxes, depreciation, amortization and rents (EBITDAR) decreased 42.4% year-on-year. Rs 1,130.1 crore and margin decreased by almost half to 17.3% from 34.1%. Bloomberg's consensus estimates had indexed IndiGo's profit at Rs 514 crore with 6736 crore of turnover.

The airline suffered a foreign currency exchange loss of 246 crore during the quarter as compared to 65 basic profits made in Q1FY18, with the rupee hovering over the `68-mark against the dollar of UNITED STATES. The rate per dollar was around 64 in the quarter of April-June last year. Payments like aircraft rentals, maintenance costs, etc. are dollar-denominated expenses for airlines.

Pbadenger performance (revenue per kilometer) decreased by 5.4% to 3.62 as the airline did not pbad on the full cost to the pbadengers. from other airlines as a result of aggressive pricing. IndiGo's aviation fuel cost (FTA) jumped 54 percent year-over-year, from 1,759 crores to 2,715 crores in the first quarter of fiscal year19. "Fares have dropped from one year to the next for trips of 0 to 15 days.This is generally for business travelers who are not price sensitive." competition does not allow us to generate returns, and we have no choice but to keep prices muted, "said Gregory Taylor, President and Chief Executive Officer, at In the June quarter, the average cost of aviation fuels (ATF) was 65,606 kl, up 28% year-over-year.The company took its available seat kilometer (ASK) or the capacity number at $ 17.8 billion, up 18.4% yoy.It also recorded a higher load factor of 90.4% in the first quarter of 1919 as against 88.6 % in the first quarter of 2009.

The continuous landing of IndiGo, the aircraft A320neo, due to the engine problem of Pratt & Whitney is also first quarter income; he saw maintenance costs increase slightly due to the increase in engine shop visits and unrealized market forex losses due to additional rents, delivery delays in A320neos the obliging to extend leases the budget carrier had to take into account the additional burden in the maintenance of the workshops.

Once A320neos deliveries begin, maintenance costs will be more aligned with younger planes, the airline's management said. Rahul Bhatia of IndiGo, who is currently acting chief executive, said he was "not happy with the situation," adding that with the deliveries of the company, he said he was "not happy with the situation", adding that with the deliveries of A320neos and A321LR, the airline would turn to China and the Southeast. Asia, and applied for traffic rights in Abu Dhabi, Jeddah, Male and Hong Kong. IndiGo once again stated that it found it difficult to cope with the current price competitiveness in the market to sell its 0-15 day stocks at higher yields, thereby influencing its pricing structure. The airline sells 40% of its stocks under this band and although it sees sales outside this window record high returns from year to year, yields in this tranche have remained under pressure.

According to a Bloomberg badyst, market dominance, IndiGo pbadenger returns remain contested as competition intensifies and it is forced to match competitors' prices. In a highly price-sensitive Indian market, we believe that there is little room for price increases, and earnings performance is determined by strict cost controls. "