IndiGo Expects Further Momentum In Air Travel Demand By July

Air travel demand is expected to gain 'further momentum' by early July, the country's largest airline IndiGo said on Monday and emphasised that managing cash position remains its primary focus.

The carrier' daily cash burn rose to Rs 19 crore in the March quarter and is expected to increase further in the June quarter.

During an analysts' call to discuss the March quarter results, IndiGo Chief Executive Officer Ronojoy Dutta said the carrier was working on securing credit line from lenders and entering into sale and lease back for new aircraft.

Facing strong headwinds due to the coronavirus pandemic, InterGlobe Aviation -- the parent of IndiGo -- reported widening of its net loss to Rs 1,147 crore in the three months to March 2021. Revenues during the same period declined 25 per cent to Rs 6,223 crore.

Dutta said the airline is expecting the February traffic level to be back by the third quarter of this year.

The airline witnessed a modest turnaround in demand in the last week of May and this has continued till early June. This shows that passengers' confidence is returning swiftly with the declining COVID cases, Dutta said.

'We are hopeful that with the recent declining trend in COVID cases and increased pace of vaccination, airline traffic will gain further momentum by early July,' he said.

In February this year, bookings on certain days were 80 per cent above the pre-COVID level.

Travel demand took a big hit in the wake of the second COVID wave as many states resorted to lockdowns and restrictions as part of efforts to curb the spread of infections.

'Will hit the February traffic level (in the best case scenario) by the third quarter of FY22. A meaningful recovery to the international traffic will be pushed to Q4 FY22,' Dutta said, adding that the in the first COVID wave, it was a slow build up and a slow decline while this time around, it was a sharp build up and so the decline will also be sharp.

In the first week of June, the airline saw a sharp increase in demand amid the declining COVID cases.

IndiGo Chief Financial Officer Jiten Chopra said the daily cash burn increased to Rs 19 crore in the March quarter from Rs 15 crore in the earlier quarter and given the current situation, the cash burn is expected to increase further in the June quarter. Emphasising that managing the cash position remains the primary focus, he said, 'we continue to work with all our stakeholders. For this purpose, we are working on securing credit line from lenders and entering into sale and lease back for the new aircraft'.

These two actions will likely result in an additional liquidity of Rs 45 billion (Rs 4,500 crore) for the coming year, he added.

'Apart from this, we have also secured board approval for raising funds by way of qualified institutional placement up to Rs 30 billion rupees (Rs 3,000 crore) and this proposal is under consideration by the shareholders,' he said.

According to Dutta, given the weakness in revenue in April and May, the airline will report deterioration in the June quarter as compared to March quarter. 'We expect to see a steady improvement in revenue for the rest of the year'.

The IndiGo chief also made it clear that the airline is consistently against any type of government regulation and has objected to both the fare band and capacity restrictions.

'Looking ahead in July, we are scheduling exactly at 50 per cent of capacity. So, we are going up to the limit. We have written to the (civil aviation) ministry that we want to do (operate) higher capacity,' he said, adding the airline is hopeful of the government lifting the restrictions on the capacity by July. 

(PTI)