IndiGo to induct ten A-320 Neos this fiscal

No-frills airline IndiGo will induct 10 fuel-efficient A-320 Neos this fiscal to its aircraft fleet and expects the company's low-cost structure to deliver improved profitability in the coming years.

Preparing to hit the capital market with nearly Rs 3,000 crore IPO next week, IndiGo's parent InterGlobe Aviation is bullish on the airline's growth prospects in the highly under penetrated domestic aviation market.

IndiGo president Aditya Ghosh told PTI in an interview here that the carrier expects to see its profit improving on the low cost structure and economies of scale.

"Absolutely, we see it improving because of only reason that is cost structure," Ghosh said in reply to a query on whether he expects profits to rise in the future.
 

As per the latest set of financial results disclosed by the company, it posted a net profit of Rs 640.44 crore in the quarter ended June 30, 2015. During the same period, total revenues stood at Rs 4,317.19 crore.

For the year ended March 2015, it recorded a net profit of Rs 1,295.58 crore on revenues of Rs 14,309.14 crore.

The low-cost carrier, which has remained profitable for the last seven years, would be inducting 10 A-320 Neos in the current fiscal ending March 2016.

Currently, IndiGo has a fleet of 98 aircraft and about 75 of them are on operating lease -- a business model which has helped it lower costs.

"In airline industry, everything is cost-driven because on the revenue side it is pretty much the same (ticket price) everybody is charging.

"Therefore when revenue is going to be determined by the market, airlines having lower cost would be more profitable. For us, with Neos coming in and we getting economies of scale, it (profitability) will become larger and larger," he said.

Ghosh further said that if all things remain the same, the carrier would remain profitable and ahead of the market, but it would be difficult to predict the quantum.

In the next fiscal (2016-17), IndiGo would induct 23 more Neos and an additional 20 Neos in 2017-18 financial year. It aims to become an all-Neo fleet airline by FY-2022, he added.

To a question on overseas expansion, on which the budget carrier has so far been quite conservative, Ghosh said the primary focus remains enhancing the domestic connectivity.

If international services were to be expanded, it would be first in the markets where it is already present, he added.

Since the launch of its first international flights (Delhi-Dubai) in September 2011, the budget carrier has added only four more overseas airports in its route network.

Ghosh, however, said the airline may add some flights on the international routes alongside expansion across the domestic network.

InterGlobe's initial public offer would open on October 27 and the price band has been fixed at Rs 700-765 apiece.

The offer comprises fresh issue of shares worth Rs 1,272.2 crore and the revised Offer for Sale (OFS) size that would be about Rs 1,746 crore. Together, the share sale can rake in up to Rs 3,018.2 crore.

With three promoters -- Rakesh Gangwal, Shobha Gangwal and Chinkerpoo Family Trust -- deciding to offload less number of shares in the company, the IPO size has come down to Rs 3,018 crore.

On the basis of earlier proposal, the initial share sale could have fetched up to Rs 3,268 crore. These figures are based on the upper price band of Rs 765 apiece.