IndiGo swings back to loss on virus flareup, higher fuel costs

Bloomberg

IndiGo, India’s biggest airline, slipped back into a loss in its latest quarter as the omicron-led virus wave in the country curbed air travel. Fuel-related expenses also rose sharply.
The carrier, operated by InterGlobe Aviation Ltd, posted a loss of 16.8 billion rupees ($216.7 million) in the three months through March, according to an exchange filing. The average estimate from analysts tracked by Bloomberg was for a loss of 8.3 billion rupees. It also marks a setback for the airline that reported a surprise profit of 1.3 billion rupees in the preceding quarter.
Revenue rose 29% from the same quarter last year to 80.2 billion rupees, while total costs jumped 32% from a year earlier to 98.9 billion rupees. Fuel costs surged 69% in the latest quarter, the filing said.
The emergence of the highly-transmissible Omicron Covid-19 variant in India upended a nascent recovery that the aviation sector was witnessing in the second half of 2021 following a deadly Delta-led outbreak in April and May last year. Credit rating firm ICRA Ltd estimates that India’s airlines lost $3.4 billion in the year through March.
“This quarter has been difficult because of the demand destruction caused by the omicron virus in the first half,” CEO Ronojoy Dutta said.
“Although traffic rebounded and demand was robust during the latter half of the quarter, we were challenged by high fuel costs and a weakening rupee.”
As IndiGo works towards returning the airline to profitability, it will focus on maintaining
its cost leadership position and building the most efficient network in the region, Dutta said. IndiGo expects the capacity to increase by as much as 60% in the year ended March 2023 and by 150% in the ongoing June quarter compared to a year earlier.
IndiGo earlier this month said Dutta will step down on September 30, and Pieter Elbers, chief of Air France-KLM’s Dutch unit, will replace him.