IndiGo airline's profit hits a new record as jet fuel prices fall and ticket prices spike
- The low-cost airline's profit hits a new record as jet fuel prices fall and competition decreases.
- IndiGo's management said that the company managed to reduce its cost of fuel by 11%, even though the actual fall in aviation turbine fuel was much lesser.
- IndiGo's Chief Executive Officer Ronojoy Dutta dismissed any significant benefit from the disappearance of Jet Airways from Indian skies.
InterGlobe Aviation Ltd-owned India's biggest airline by market share, IndiGo, on Friday posted its highest ever quarterly net profit at ₹1,203 crore for the first-quarter of 2019-20.
"Strong passenger revenues along with a sharp improvement in cargo performance were key drivers to this improved profitability. We are particularly pleased with this quarter because it demonstrated our ability to grow rapidly while simultaneously expanding our margin performance," the company's CEO, Ronojoy Dutta said.
In a conference call with analysts, the management highlighted that its efforts in managing its fleet and routes led to a fall in fuel cost of 11% during the quarter whereas the actual fall in jet fuel was much lesser.
"Going forward, obviously, this quarter the aircraft utilisation was a little lower due to some temporary issues. As that improves there will be some tailwinds in terms of fixed costs," Rohit Philip, the chief financial officer of IndiGo said.
Sales jumped 42% to ₹9,420 crore and market share has steadily risen since rival Jet Airways went bankrupt and stopped flying. This has helped all airlines charge higher airfares while costs came down, helping their profits.
However, Chief Executive Officer Ronojoy Dutta dismissed any significant benefit from the disappearnce of Jet Airways on the company's performance. IndiGo only got 35 slots vacated by Jet in the Mumbai airport and that's a small portion of the total 1400 slots IndiGo has.
For fiscal year 2020, year over year capacity increase in available seat per kilometre is expected to be 30%, the company said in a presentation.
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