IndiGo’s ‘grounded quarter’ may lead to more loss than all the profit in the last three years

IndiGo
  • IndiGo is slated to report its June quarter earnings tomorrow, July 29.
  • According to various analysts reports, IndiGo is expected to post a loss of ₹2,431 crore.
  • According to Directorate General of Civil Aviation (DGCA), India’s domestic air passenger traffic crashed over 43% in May and continued with a 50% dip in June.
With the suspension of air travel for almost 2 months in the last quarter, this quarter earnings from InterGlobe Aviation-run IndiGo are going to be a washout.

Apart from the lockdown, the additional cost of operating in the times of coronavirus and the burden of aircraft rentals for the period under review is likely to burn its pockets. Even, CEO Ronjoy Dutta himself admitted while laying off employees earlier last week. He said, “IndiGo is flying only a small percentage of its full fleet of 250 aeroplanes.”

Dutta also highlighted that the current pandemic has impacted many industries around the world, among which aviation has been one of the sectors that has been the hardest hit. With no aid from the government and even with it’s escalated cost cutting measures, it has been a tough challenge for Indigo.

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According to various analysts reports, IndiGo is expected to post a loss of ₹2,431 crore. Apart from travel restrictions, the budget carrier has faced additional challenges in form of restricted ticket pricing, classified on the basis of flight duration, till August 24. Jet fuel has been touching new highs in the past quarter because of the low demand and less air traffic.

BrokerageNet Loss (expected)
Prabhudas Liladher₹3,215.6 crore
Centrum Broking₹2,672 crore
JM Financial₹1,938 crore
Motilal Oswal₹1,901 crore

According to Directorate General of Civil Aviation (DGCA), India’s domestic air passenger traffic crashed over 43% in May on a year-on-year basis. It continued with a 50% dip in June even after the government eased restrictions on domestic travel.

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And, that is the reason IndiGo’s shares have not seen a rally in the past months. The shares of the largest domestic carrier is down over 15% since March 31, and is expected to remain low with no respite in sight for the COVID-led selloff in the aviation industry.

BrokerageRecoTarget Price
EdelweissSell₹961
JM FinancialsSell₹700

Indigo looks to raise funds

Indigo is planning to raise about ₹ 3,000 crore to augment its long-term future and strengthen its balance sheet. According to the intimation to stock-exchanges, IndiGo said that a board meeting is proposed to be held on July 30, to discuss and consider raising of funds.

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