Interglobe Aviation skids on lowering capacity growth outlook

Interglobe Aviation declined 2.74% to Rs 1,366.70 after the low-cost airliner lowered its capacity growth guidance for fiscal year 2020.

IndiGo said it expects its capacity to grow by 22-23% for fiscal year 2020 as against earlier stated guidance of 25% announced during September quarter earnings. It expects capacity growth of 15-20% in Q4 March quarter.

The company lowered its capacity growth guidance for the second time in last 45 days. During the second-quarter earnings, IndiGo had lowered its capacity growth guidance to 25% from 30% for 2019-20.

Despite expected MTM forex losses, IndiGo expects profits in the third quarter to be similar to last year. RASK (revenue per available seat kilometre) and CASK (cost per available seat-kilometer) are expected to increase by about 4-5% in the ongoing quarter.

The company cited adverse movement in fuel prices/foreign currency from the current levels as major risks.

Pilot shortage, uncertainty on Jet Airways slots, uncertainty on Jet Airways bilateral, risk of losing other bilateral and NEO engine issues are some of the revenue headwinds in FY2020. These headwinds likely to disappear by Summer 2020, the company said. The announcement was made after market hours yesterday, 4 December 2019.

Meanwhile, the S&P BSE Sensex was up 94 points or 0.23% to 40,944.47.

On the technical front, the stock's RSI (relative strength index) stood at 34.9. The RSI oscillates between zero and 100. Traditionally the RSI is considered overbought when above 70 and oversold when below 30.

The stock was currently trading below its 50-day moving average (DMA) placed at Rs 1,586.80, as well as below its 200 DMA placed at Rs 1,514.39.

Interglobe Aviation reported a consolidated net loss of Rs 1,061.99 crore in Q2 September 2019 as compared to net loss of Rs 651.54 crore in Q2 September 2018. The net sales rose 31% to Rs 8,105.19 crore in Q2 September 2019 over Q2 September 2018.

Interglobe Aviation is engaged in the provision of passenger services. The company is engaged in the business of providing domestic and international scheduled air transport services under the name of IndiGo.

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