Much due to the COVID-19 crisis leading to ensuing travel restrictions, everybody knew InterGlobe Aviation Ltd running IndiGo would report huge losses within the June quarter. The debatable question remained how much?
An overall Rs 2849 crore on revenues of nearly Rs 767 crore was India’s largest net loss of the airline. All in all, this means the loss margin stood at a staggering negative of 371%.
On the upside, the fixed cash burn has dropped to about Rs30 crore per day in June from approximately Rs 40 crore per day in March. Cost-cutting initiatives and a cash contribution from the much smaller scale from operations helped in this improvement since then. Since the March quarter, IndiGo’s employee costs and supplementary rentals & maintenance cost declined by about 17% and 56%, respectively, in the June quarter.
IndiGo expects cash contribution to increasing further as its operations scale up, boosting its liquidity position. Speaking of cash, the airline has performed well. The sequential drop in its free cash was curtailed to Rs1400 crore. At June-end, free cash stood at Rs 7527 crore, offering enough comfort to sail through this stormy weather.
With uncertain business conditions, how long the free cash will last remains a question. ICICI Securities Ltd reported, “Based on Q1FY21 run rate and considering IndiGo is following a strategy of continued induction of neos, the present free cash of Indigo will last for four quarters even without any vendor negotiations and seven quarters including the impact of negotiations seen in Q1FY21.”
Analysts say overall, IndiGo’s liquidity measures (Rs 3000-4000 crore) and cost control efforts have helped contain the drop in cash balances vis-à-vis reported performance.
“We expect that these actions will help us raise additional liquidity of approximately Rs2000 crore,” said Aditya Pande, chief financial officer, Interglobe Aviation.
IndiGo’s capacity guidance is a bit underwhelming. The airline expects its September quarter capacity to be about 40% and that of December quarter to be 60-70% on a year-on-year basis.
Prabhudas Lilladher Pvt. Ltd has cut IndiGo’s FY22/FY23 Ebitdar estimates by 7.4% and 9.5% respectively as scaling up of operations remains sluggish given localized lockdowns and low consumer confidence due to rising incidence of Covid-19 cases
Unsurprisingly, the IndiGo stock is about 40% away from its pre-COVID high in January.

Read EquityPandit’s Nifty Outlook for the Week