IndiGo sees domestic traffic recovering by Q3FY22 as vaccination picks up

The company will not pay any dividend for FY21

India’s largest airline IndiGo expects a recovery in domestic traffic by Q3 of FY22. However, the airline expects a longer recovery period for international which it expects to normalise only by Q4 of current fiscal.

IndiGo CEO Ronojoy Dutta said that while in February, passenger traffic had almost reached 80 percent of what it was in pre-COVID level, the company thinks that it can reach that stage only by the festive season of calendar year 2022.

“We started to see a decline in March but this decline accelerated in April and May. However we are now seeing a modest turnaround at the end of May which has continued in June. We are expecting that with accelerated vaccine programme, passenger sentiment will recover faster,” IndiGo CEO Ronooy Dutta said.

The company said that it will not pay dividend for FY 22.

The company, said Dutta will now slow down delivery of new aircraft but will increase the pace of return of older A320 Ceo aircraft. In FY 21, IndiGo took delivery of 46 new aircraft- highest for any airline across the world.

CFo Jiten Chopra said that while cash burn will significantly has gone up due to the second wave, the airline will use sale and leaseback and raising funds via QI to shore up liquidity.

IndiGo has managed to pretty much maintain its cash position. Its free cash at the end of March stood at Rs7,099 crore vis-à-vis Rs7,444 crore at the end of December. For the same period, total cash, including restricted cash, stood at Rs18,568 crore vis-à-vis Rs18,365 crore, respectively. Analysts point out that the various liquidity measures that the airline has undertaken during the year have helped offset cash burn during fiscal 2021.

The airline's consolidated net losses widened to ₹1,147.16 crore during the March quarter from ₹620.14 crore during the December quarter, and ₹1,194.83 crore losses in the quarter to September. IndiGo had reported a loss of ₹871 crore during the March quarter of the previous year.

India had for a while been fairly robust for airlines thanks to its vast domestic network, though any positivity evaporated with the arrival of a devastating virus wave, which put the brakes on travel. The numbers are staggering, and likely under-reported. Latest data show nearly 30 million confirmed Covid-19 cases and more than 349,000 deaths.

According to leading airlines, the total number of air passengers per day across India has doubled from a low of 40,000-42,000 a day in May to an average of over 82,000 a day in the first week of June. The upsurge in passenger numbers has taken place as states have started easing lockdown measures, buoyed by declining infection numbers and case positivity rates.

The uptake of passengers at Delhi airport, the country’s largest by capacity and number of passengers, has also seen an increase in the first few days of June, hitting 30,000 a day — a 66 per cent rise over 18,000 a day throughout the month of May.