(Bloomberg) -- India’s largest airline IndiGo posted a surprise loss — its first in two years — weighed down by a higher fuel bill and a jump in maintenance costs.
The carrier operated by InterGlobe Aviation Ltd. reported a loss of 9.9 billion rupees ($118 million) in the three months ended Sept. 30, it said in an exchange filing Friday. A Bloomberg survey of brokerages had forecast an average profit of 1.34 billion rupees for a quarter that usually sees seasonally tepid demand.
Revenue for the quarter rose 14% to 169.7 billion rupees but missed estimates. Total costs climbed 22% to 186.66 billion rupees, with fuel costs jumping 12.8% from a year ago and maintenance costs surging 30%, the filing said. Airport fees for the airline also rose about 40% in the latest quarter.
“In a traditionally weaker second quarter, results were further impacted by headwinds related to groundings and fuel costs,” Chief Executive Officer Pieter Elbers said in a statement. The number of grounded aircrafts and linked costs for the carrier have started declining, he said.
Debt rose 20% from a year ago to 592.37 billion rupees. Its passenger load factor fell to 82.6% from 83.3% in the same quarter last year.
The Gurugram-based carrier also started receiving compensation from Pratt & Whitney’s affiliate in the quarter to mitigate the impact of the grounded planes.
The airline is expected to reduce the number of grounded planes to below 60 by the end of this year and to about 45 by the beginning of the financial year starting April, Chief Financial Officer Gaurav Negi said on a post-earnings call. IndiGo had about 75 planes grounded in the quarters ended June and September, he said.
Increasing Competition
Airlines in India typically see relatively lower demand in the quarter to September. IndiGo had a 62.5% market share in the three months, lower than the 63.4% share it had in the same period last year, amid increasing competition as Air India undergoes a mammoth merger with Vistara.
Internationally, IndiGo is facing “increased competition” even as demand grows because India has become an attractive destination for visitors, Negi said.
The airline added 28 jets during the quarter, with its seat capacity rising 8.2% during the period. It sees this capacity for the quarter to December increasing by “early double digits” as compared with the year-ago period, according to the statement.
The airline also announced its business class product on some key routes in India in August, paving way for its transition from a low-cost carrier to a full-service airline. The premium offering is expected to roll out by the end of this year, it said then.
IndiGo also got a board nod on Friday to invest as much as 2.95 billion rupees ($35.1 million) in IndiGo Ventures Fund, that was approved by the local markets regulator this month.
The carrier’s shares have jumped 47% this year, beating India’s Nifty 50 index that has gained 11.3%. The earnings came after market hours Friday.
--With assistance from Ravil Shirodkar.
(Updates with comments from CFO in seventh paragraph)
©2024 Bloomberg L.P.
