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Indigo Attributes Competitive Fare Pressure for a 7.4% Drop in Net Profit : Result Analysis

Interglobe-Aviation-Q12017-Results-Analysis.png

indigo_web_logo Indigo Airlines witnessed a 11% drop in Average Fare Price for the period ended June, 2016. The average fare stood at Rs. 4,032/- compared to Rs. 4,524/- the last time though passenger revenues witnessed a growth of 6.9% at Rs. 3,972 crore. Domestic revenue increased by a tad 9.8% while International revenue increased by a timid 12 crore.

Though the company has witnessed a bump is the number of passengers traveled (Indigo carried 9.85 million passengers compared to 8.21 million), the average revenue realized (Load factor fell from 87.9% to 83.3%) has fallen sharply considering Q1 is the peak season and said to be the best quarter for the year. This fall can be attributed to expenses which increased a massive 17.5% to Rs. 3,994.7 crore.

Interglobe Aviation Q12017 Results Analysis Comment2

Related Post: Indian Domestic Airlines Report Card for June 2016 – first dip due to seasonal fluctuations

Result Analysis: Interglobe Aviation

  • Total Income from Operations increased 8.7% to Rs. 4,578 crore.Interglobe Aviation Q12017 Results Analysis Segment Revenue
  • Profit After tax witnessed de-growth by 7.3% at Rs. 591 crore.
  • EPS fell from Rs. 18.58 per share to Rs. 16.27 with the company treasuring over Rs. 6,196 crore in cash (about Rs. 171.5 per share)

Other notable points were:

  • Indigo’s debt which is only aircraft related has reduced from Rs. 3,244.6 crore to Rs. 2,785.7 crore. However, its engine supplier Pratt & Whitney have slowed down their engine production affecting Indigo’s operations with the new A320neo aircrafts. Its Aircraft and Engine rental expenses shot up to Rs. 712.6 crore from Rs. 569.7 crore.
  • Indigo currently has 109 air crafts with an avg. lease period of 4.8 years.
  • Employee Benefit expenses jumped another 100 crore from Rs. 383.7 crore to Rs. 478.9 crore.
  • Indigo has utilized over 90% of the IPO proceeds mainly used towards the retirement of the outstanding financial lease related to aircraft acquisition. Indido retired the lease for 3 aircraft in the current quarter.
  • The company expects its Q2 Available seat kilometres to increase by about 25%

Interglobe Aviation Q12017 Results Analysis
Disclosure: Analyst or Family do not hold the stock
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