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

BCCL
India’s largest domestic carrier IndiGo’s CEO Ronjoy Dutta said the company might not go ahead with its fundraising plans if the revenue from sales improves in the coming months.

The company board had approved a plan in August to raise up to ₹4,000 crore through a share sale to institutional investors.

“The board has passed an enabling resolution for a QIP to raise funds but whether we ultimately go for it or not depends on how the sales revenue side develops. At this point in time, I would like to say that there is a 50-50 chance of the QIP happening,” Dutta said at the company’s Annual General Meeting on September 4.

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“We are focussed on increasing liquidity through sales revenue while having these financial initiatives on the side as bullets which we could use but not have to use,” he added.

Dutta told investors that due to the cost-cutting measures the company had brought down the cash burn to ₹30 crore from ₹40 crore a day when the initial lockdown was lifted, and the company was operating at 30-35% of its actual capacity.

He further added that the government's move to increase airlines’ operating capacity to 60% will augur well for them. The company hopes this increased capacity will translate to more revenues.

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The company also took some drastic cost-cutting measures such as leasing back 12 of its ATR 72-600 aircraft and their engines, and cutting down the 10% of its workforce to save cost. As per the June quarter financial reports the company had a total cash balance of ₹18,449.8 crore, out of which ₹7,527.6 crore was free cash and ₹10,922.2 crore was restricted cash.

Dutta also told investors that the company is not planning to hire any wide-body aircraft and would wait for the extra long range (XLR) aircraft delivery in the first quarter of 2024.

SEE ALSO: IndiGo commences flight services from Kochi to Maldives under air bubble deal

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