IndiGo posts Rs 1,290 crore pre-tax loss in Q4 amid Covid-19 lockdown

The country’s largest airline, IndiGo, will not pay any dividend to its shareholders for the financial year ended 2020, the company has announced. This, along with other cost-saving steps, would help the company generate liquidity of around Rs 4,000 crore to withstand the Covid-19 crisis, it said on Tuesday. 

Although unsure of revival in demand, Chief Financial Officer Aditya Pande said there was  a slight uptick in forward bookings after the lockdown was relaxed.

The company reported a consolidated pre-tax loss of Rs 1,290 crore in the March quarter as compared with a profit of Rs 626 crore in the year-ago period. This was due to a surge in cost amid tepid revenue growth. Loss at the net level stood at Rs 870 crore as compared with a Rs 596 crore profit in the year-ago quarter. The company’s consolidated income rose 4.5 per cent year-on-year to Rs 8,635 crore for the March quarter, while costs soared by nearly a third to Rs 9,924 crore.

Despite the government allowing 30 per cent capacity, the airline has only been able to operate at 20 per cent as various quarantine measures by states have made people reluctant to fly, according to IndiGo CEO Ronojoy Dutta. “However, as of now we see a lot of pent-up demand but it is very difficult to give a long-term picture,” Dutta said. He expects the demand on international sector to be strong when it restarts.

Among the many steps that will help the airline generate savings include cost renegotiation with suppliers and vendors, deferment of supplementary lease rentals to lessors and restructuring employee cost.

“We have prided our self on a strong balance sheet. Given the need to preserve cash, we will not pay any dividend this year and the above steps will help to generate more liquidity,” Dutta said.

“We have approached all our suppliers and vendors to reduce the purchase service cost and I should tell you that we have already successfully renegotiated many of those,” he added.

However, he refused to give any future guidance. “Given the volatility, it is difficult to give any revenue guidance for the future,” he said.

The airline is however upbeat on cargo during the lockdown. “We have used 10 aircraft purely to ferry cargo even inside the cabin and we are pleasantly surprised by the result. We are studying if we should continue with this initiative,” Dutta said.