IndiGo may shelve QIP as it hopes to increase capacity in festive season
IndiGo may shelve its plans to raise Rs 4,000 crore from the market as it expects to see an improvement in its financial situation, driven by increased sales during the upcoming festive season.
“The plan to raise money through qualified institutional placement (QIP) has a 50-50 chance and the preferred path is to increase sales revenue,” IndiGo’s chief executive Ronojoy Dutta told shareholders at the 17th annual general meeting on Friday.
In August, the country’s largest airline operated by InterGlobe Aviation, had announced plans to raise up to Rs 4,000 crore through an issue of equity shares by way of a qualified institutional placement. The announcement was made as the airline needed money to fund its losses, which were mainly because of the two-month long lockdown.
He added that the cash burn is down to Rs 30 crore from Rs 40 crore a day when the lockdown started.
He said that the airline was at present utilising about 35 per cent of its total fleet because of the various travel restrictions imposed by states that prevented the airline from adding capacity.
“We are aggressively adding capacity and hope to take that utilisation number up as fast as we can,” he added.
The airline hopes to operate 60 per cent of its existing capacity by Diwali.
Unlike last year, both the promoters of the company — Rahul Bhatia and Rakesh Gangwal — were present at the AGM held virtually. Both promoters are involved in a feud which is at present under arbitration before the London Court of International Arbitration (LCIA).
IndiGo reported a consolidated net loss of Rs 870.81 crore in the March quarter compared with a profit of Rs 596 crore a year ago. It reported its highest quarterly loss of Rs 2,844 crore in the first quarter of this financial year.
Dutta also said there was no plan to hire wide-bodied aircraft and the airline would wait for the XLR delivery, which is scheduled to arrive during the first quarter of 2024.
IndiGo, however, was looking to wet lease long-haul aircraft and launch international charter flights but the airline did not go ahead with the plan.
Airline companies, which are the worst hit due to COVID19 and the lockdown, are seeing some signs of returning to normalcy after states started relaxing quarantine and entry norms.
Rating agency ICRA said in a research report that the domestic aviation industry operated at a passenger load factor of 55 percent in July as against 86.3 percent in the same month last year, when demand had remained poor.
“ICRA maintains that H2 FY21 will witness some recovery, with Q4 FY21 witnessing year-on-year de-growth of just 3-14 percent in domestic passenger traffic with improved PLFs (passenger load factor), and overall FY21 witnessing 41-46 percent de-growth in domestic passenger traffic,” it said.
The International Air Transport Association (IATA) has said that 2020 is the worst year in aviation history, and airlines in the Asia-Pacific region alone are expected to report losses to the tune of $29 billion. Indian carriers are estimated to lose revenues of $11.61 billion during 2020 compared with 2019, and this is expected to impact 3.06 million jobs.
“On average, every day of this year will add $230 million to industry losses. In total that’s a loss of $84.3 billion,” Alexandre de Juniac, IATA’s director general and CEO, said in a statement.