Home Finance & Investing Business IndiGo Posts Profit Of Rs 189 Crore In Q8; Faulty P&W Engines Ground More Aircrafts

IndiGo Posts Profit Of Rs 189 Crore In Q8; Faulty P&W Engines Ground More Aircrafts

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IndiGo Posts Profit Of Rs 189 Crore In Q8; Faulty P&W Engines Ground More Aircrafts

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IndiGo has reported a net profit of Rs 188.9 crore for the three months ended September as the country’s largest airline remained in the black for four straight quarters, boosted by higher traffic and increased capacity. InterGlobe Aviation, the parent of IndiGo, had posted a loss of Rs 1,583.3 crore in the year-ago period, according to a release. The net profit, excluding foreign exchange loss, stood at Rs 806.1 crore in the latest September quarter. In the second quarter of the current fiscal, IndiGo’s total income jumped 20.6 per cent to Rs 15,502.9 crore. In the same period a year ago, the total income stood at Rs 12,852.3 crore.

For four consecutive quarters, IndiGo has delivered profitable growth demonstrating effective execution of its plans and strategy coupled with strong demand, the release said.

“With our clear strategy and focus on execution, we have completed a full cycle and remained profitable for the last four quarters,” IndiGo CEO Pieter Elbers said.

The airline’s capacity increased 27.7 per cent in the September quarter, which is “seasonally the weakest quarter”, as per the release.

“Yield declined by 12.4 per cent to Rs 4.44 and load factor improved by 4.1 points to 83.3 per cent,” the release said.

During the quarter, the number of passengers rose 33.4 per cent to 26.3 million.

“Third quarter of fiscal year 2024 capacity in terms of ASKs is expected to increase by around 25 per cent as compared to the third quarter of fiscal year 2023,” the release said.

While the company announced that it has posted a strong profit for the third-quarter of the year 2023, it is plagued with other issues. The airline is facing challenges from the P&W engines that are forcing the carrier to ground more planes. Currently, around 40 planes of the airline are grounded due to the engine issues, according to a senior airline official.

IndiGo, which had a fleet of 334 aircraft at the end of September, is taking various measures, including taking planes on wet lease, retaining ceo aircraft and also leasing additional ceo planes from the secondary market.

Against the backdrop of powder metal issues flagged by P&W, IndiGo’s Chief Financial Officer Gaurav M Negi said globally, the airline understands that a large number of incremental engines are being removed for shop visits between 2023 and 2026, and a majority of incremental engine removals are planned for 2023 and early 2024.

“Our current estimate is that these accelerated inspections and incremental shop visits will further adversely impact our operational fleet from the fourth quarter (January-March period) onwards, which is post January 2024 and will lead to a higher number of grounding.

“We are in constant touch with our OEM (Original Equipment Manufacturer) to navigate these challenges,” Negi said during an earnings call to discuss the September quarter results.

As part of mitigating measures, the airline is looking at various options, including exploring additional capacity from the secondary market, Negi said.

“We have taken a whole range of measures… In living up to our capacity guidance of north of mid-teens (for this fiscal),” IndiGo CEO Pieter Elbers said, adding that there is a lot of focus with respect of grounding of aircraft.

In the three months ended September, IndiGo posted a net profit of Rs 188.9 crore.

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