Business Standard

Fuel costs, plane delivery delays hit InterGlobe profit


By Aditi Shah and Krishna V Kurup
NEW DELHI/BENGALURU (Reuters) - InterGlobe Aviation Ltd, which operates top Indian airline IndiGo, on Monday reported its lowest quarterly profit in three years, with earnings hit by surging fuel costs and forex losses.
Lower fares and higher maintenance costs of older aircraft - due to delays in deliveries of new Airbus A320neo planes - also contributed to the fall in profit, Chief Financial Officer Rohit Philip said.
While deliveries of the A320neo aircraft have now resumed, IndiGo was forced to extend the lease on several of its older planes.
"As our older planes get replaced by A320neos, in addition to the fuel burn advantage, we expect to see a reduction in maintenance costs as well," Philip said during a call with analysts.
The company has received some compensation for the delays, Philip said, but he did not disclose the amount.
IndiGo has been forced to ground several of its A320neo aircraft because of issues with the Pratt & Whitney engines.
Rahul Bhatia, the airline's co-founder and interim CEO, said the company hoped the issues would be "resolved at the earliest", and in the interim it continues to rely on spare engines.
IndiGo has sporadically faced a shortage of spare engine that have lead to the temporary grounding of planes but Bhatia expects the situation to "improve in the current quarter", starting July 1.
InterGlobe's profit for the quarter to June 30 fell 97 percent to 277.9 million rupees ($4 million) from 8.11 billion a year earlier, the company said on Monday.
Fuel costs surged 54.4 percent to 27.16 billion rupees, while forex losses climbed to 2.46 billion rupees. Revenue from operations rose 13.2 percent to 65.12 billion rupees.
InterGlobe said competition in fares also impacted earnings with passenger yields, which gauge the average fare paid per mile per customer, falling 5.4 percent.
Its revenue per available seat kilometre also fell 3.1 percent to 3.70 rupees.
"We do not believe that these fare levels are sustainable especially with the increase in input cost," Bhatia said, adding that the airline had "no choice" but to keep fares competitive.
IndiGo reaffirmed its guidance of a 25 percent rise in available seat kilometres, a measure of capacity, in the fiscal year that began on April 1.
Ahead of the results, InterGlobe shares ended flat on a broader Mumbai market that closed up 0.4 percent.
($1 = 68.6700 Indian rupees)
(Additional reporting by Aparajita Saxena in Bengaluru; Editing by Jason Neely and Jane Merriman)

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First Published: Jul 30 2018 | 9:39 PM IST

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