IndiGo Q1FY20 results

In the last week of October this year, IndiGo Airlines reported its Q2FY20 results reflecting a loss of 1,062 crore as against a profit of 1,203 crore in the previous quarter. The huge loss in the second quarter was undoubtedly surprising. Overall this was one of the few instances where the cost of flying each seat (CASK) exceeded the revenue earned per seat (RASK) by 0.40. That is, the airline lost 40 paise for each seat it flew each kilometre. Take the total capacity flown of 24.2 billion ASKs and the operational loss figure is clear. The quarter also witnessed two arbitration cases filed by one of the promoters Rahul Bhatia as a part of the ongoing dispute in the management. The dispute as it relates to impact to the company seems to be settled for now. The Annual General Meeting (AGM) saw several proposals being approved and implemented – many of them being the ones that were highlighted as a matter of concern in the promoter dispute.

The quarter saw IndiGo launch a number of international routes including to China, Middle East, Hong Kong and Vietnam. This continues to be a focus area and for the half-year, approximately 50 per cent capacity has been deployed on international routes. These routes take time to mature and the impact has been seen in the operational cash-flow. Additionally, not all international routes are a net positive. Much like the Istanbul flight which continues to see challenges – for some of the routes the sector length is far too long. This eats into the cost base as crews cannot be flown back, the yields are lower compared to the full-service carriers.