EXCLUSIVE: IndiGo exec shares why it is the second-best performing airline stock globally this year despite record losses

Chow Kin Hei/Jet Photos
  • IndiGo increased its market share from 53% in June to 60% in July.
  • There are at least two things that make IndiGo a preferred stock among airlines — less competition and a lot of cash in hand.
  • According to Bloomberg, 16 out of 22 analysts covering IndiGo have a ‘buy’ rating on the stock.
  • Check out the latest news and updates on Business Insider.
“The airline business is killed. We are in deep trouble overall,” said IndiGo’s chief commercial officer Willy Boulter in an exclusive interview with Business Insider. Yet, Interglobe Aviation, the company that owns the airline, has been the second-best performing airline stocks across the world this year.

Even in the past three months, IndiGo is the only carrier in the list of the top 10 airline stocks globally — the other nine being from China where the skies have opened up for travel — according to a Bloomberg report. There are at least two things that make IndiGo a preferred stock among airlines — less competition and a lot of cash in hand.

AirlinesStock price change this yearCash in books at June end
Delta-45.64%$11366 million
American Airlines-54%$462 million
United Airlines -58.60%$6,505 million
Southwest Airlines-27.86%$12351 million
Lufthansa-47%$1434 million
Ryanair-16.61%$3324.58 million
IAG-67.94%$5562.29 million
Air France-KLM-62.50%$5680.74 million
easyJet-58.40%$1562.91 million
Cathay Pacific-37.65%$790.15 million
China Eastern Airlines-12.39%$1075.28 million
China Southern Airlines-14.48%$2541.52 million
Japan Airlines-48.23%$3713.88 million
Spring Airlines7.97%$1359.57 million
IndiGo-4%$2509.10 million
Source: Company Financials

Make no mistake, Indigo itself has clocked two straight quarterly losses — the April-June loss was as much as the profit for the last three years combined— but the management is still optimistic because it has a cash cushion like no other in India.
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“At IndiGo, we came in a very strong position compared to most airlines, so if you compare cash balances available to us from all the airlines around the world. We were roughly in the top 25%,” IndiGo’s chief commercial officer Willy Boulter told Business Insider in an exclusive chat.

Total cash balanceQuarter ended March 31Quarter ended June 30
IndiGo₹ 20376.9 crore₹ 18449.8 crore
SpiceJet₹28.15 crore Yet to announce
Source: Company Financials

Right now, when the pandemic has brought air travel to a halt, the cash stash is crucial for survival. “We are confident that by adding capacity very quickly, we [are] now up to around mid of the 30’s [capacity] where we wanted to be,” Boulter revealed.
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And, the company’s CEO himself accepted at the AGM that the company is still burning cash. However, the cost-cutting measures had brought down the cash burn to ₹30 crore from ₹40 crore a day when the initial lockdown was lifted, he said.

Although IndiGo carried a small number of passengers in July due to government restriction. But it increased its market share from 53% in June to 60% in July, whereas SpiceJet’s market share declined 1% in July and Air India was down a staggering 4%, compared to a month earlier.


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As Boulter put it, “things are improving, but we are still a long way short of where we were. The demand is relatively good. We have been encouraged by the response of the market as we had capacity back. So we are optimistic about the future.” Data showed that in August, passenger traffic was back to a point where 100,000 passengers were travelling daily across India.

And the shareholders have been rewarded.


And, the brokerage firms are optimistic too. According to Bloomberg, 16 out of 22 analysts covering IndiGo have a ‘buy’ rating on the stock.
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IndiGo: Consensus Rating
RatingConsensusBrokerages
Buy72.7%16
Hold22.7%5
Sell4.5%1
Source: Bloomberg

SEE ALSO: IndiGo is burning less cash — but CEO may put fundraise on hold if revenue improve

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