InterGlobe Aviation, which operates India's largest airline IndiGo, today reported a 23.7 per cent jump in net profit at Rs 657.28 crore for the three months to December, and said it will miss the 111-fleet target by March following labour issues at Airbus.
The delays could throw a spanner in the ambitious growth plans of IndiGo, which has been betting on the more fuel-efficient A320 Neos (new-engine option) whose delivery was to start from this month and had even told this to investors during the recent IPO launch.
As per the original plan, IndiGo was to induct 10 A320 Neos by this March 31, 2016, which would have further boosted its bottomline as these new planes consume up to 15 per cent less fuel, which cost almost 35 per cent of operational cost.
IndiGo President and Whole-Time Director Aditya Ghosh said that out of these 180 Neo planes, it has already financed 35 and there is no difficulty in getting the funds as this is a market that is always on the short-supply.
To tide over the plane shortages, Ghosh said the airline would be looking at more short-term leases, but refused to elaborate. He parried a query whether the airline will be seeking compensation from Airbus for delays.
The airline management attributed the good set of numbers, the first post-IPO, to lower fuel prices that declined more than 20 per cent in the quarter, and higher passenger and ancillary revenues, wherein the latter soared 27.5 per cent.
To questions from analysts on the aircraft acquisition plans and meeting the stated target of 111 fleet by this March and 132 by 2017, Ghosh said, "As of now we have no clarity on the delivery of aircraft from the supplier. We are in talks with both Airbus and Pratt & Whitney, the engine suppliers to the aircraft maker.
"So as of now, we are set to miss the target. As of now we have a fleet of 101 aircraft, after taking 17 planes from Tiger Airways on lease and will have 3 more by March and the remaining 2 by September, completing our announced 22 new leases."
The carrier, which got listed last November after a highly successful public issue raising a little over Rs 3,000 crore, had a net profit of Rs 531.57 crore in the year-ago period.
IndiGo's revenues climbed to Rs 4,407.49 crore in the reporting quarter, an increase of nearly 12 per cent compared to Rs 3,938.79 crore in the same period a year ago, Chief Financial Officer Pankaj Madan said.
"Our business continues to perform well on the back of increase in fleet size, robust passenger demand and low fuel prices," Ghosh said.
The most profitable carrier in the country since 2009,
IndiGo, flew 8.33 million passengers in the December quarter compared to 6.53 million people flown in the year-ago period.
The no-frills airline saw its fuel cost decline about 20 per cent to Rs 1,165.86 crore as against Rs 1,453.52 crore in the same period a year ago, Madan said.
"Lower fuel prices enabled us to lower our fares for our customers, further stimulating market demand and increasing the propensity of people to travel," Ghosh said.
It can be recalled that IndiGo had made history by ordering as many as 430 aircraft from Airbus. It had ordered 100 Airbus A320s in June 2005, 180 A320neos in June 2011 and 250 A320neos in August 2015. Each of these orders was the largest single order of aircraft by number from Airbus at the time of the order, according to the European planemaker.
Out of the 180 planes on order, 150 are A320Neos and the rest 30 are A320.
Airbus had promised to deliver the first batch of A320Neso by December 30, 2015. But instead it delivered the first plane to Lufthansa yesterday and then next will be to Qatar Airways.
On December 19, 2015, Indigo had informed the exchanges that there was no clear visibility about the delivery of A320 Neos due to "industrial reasons" at Airbus.
"On 17 December 2015 after close of business hours, we have received an official notification from Airbus that the A320Neo aircraft, the first of which was to be delivered on December 30, 2015, has been delayed due to 'industrial reasons'," InterGlobe Aviation told the exchanges.
"At this time, we do not have a clear visibility of its future A320 Neo delivery schedule and the potential for additional delays exists. We are looking at mitigating the potential shortfall in capacity through other options," it added.
In the third quarter, the company's total expenses stood at Rs 3,474.59 crore, higher than Rs 3,186.18 crore in the 2014 December quarter.
"The rupee depreciated from Rs 63.04 to Rs 66.15 over this period which had an impact on the overall costs," Madan said.
"The total debt was Rs 3,930 crore, all of which is aircraft related and no capital debt," he added. The firm's cash balance stood at Rs 5,746.3 crore, including free cash worth Rs 2,097.4 crore.
