IndiGo Q3FY24 results: Net profit rises 111% to Rs 2,998.10 crore

IndiGo, the country’s largest airline, on Friday posted a consolidated net profit of Rs 2,998.1 crore in the third quarter of 2023-24, which was more than double (110.7 per cent) of what it earned in the corresponding period a year ago, due to high demand amid the peak travel season. 

The airline announced that it has grounded about 75 aircraft due to issues with the Pratt and Whitney (PW) engines. As on December 31, the airline has 358 planes in its fleet.

In September 2023, PW announced its engines could have a powder metal defect, which could lead to the cracking of components. 

In November, IndiGo  announced it would be grounding about 35 planes in the fourth quarter of 2023-24. These planes will remain grounded till PW completes its inspections.

Even before the powder metal issue, about 40 planes of IndiGo were grounded due to an old issue in PW engines’ geared turbofans.

“The current aircraft on ground are in the mid-70s, which is a slight improvement from our earlier estimates. We are working with Pratt and Whitney on spare engine availability and are hopeful that the situation will start to improve in a few quarters from now,” the airline’s Chief Financial Officer Gaurav Negi said during the investor concall.

He said the proactive mitigation measures — which includes retention and extension of leases of existing aircraft and procurement of additional aircraft as “damp and secondary dry leases” —taken by IndiGo will allow the airline to navigate this situation in “a desired manner and grow capacity in the next financial year”.

He added the company is in discussion with PW regarding the quantum of compensation it should get due to these aircraft on ground (AOG).

As the demand was high during the peak travel season between October and December, the airline’s load factor increased to 85.8 per cent in this period as compared to 85.1 per cent in the corresponding quarter a year ago.

IndiGo CEO Pieter Elbers expressed confidence that the company will be able to deal with the situation of AOG.

“We have been confronted, since the middle of 2022, with supply chain challenges in different modalities and yet, this is the fifth consecutive quarter, in which we are either achieving or even surpassing our capacity guidance,” Elbers said.

“In the third quarter, our capacity grew by 27 per cent year-on-year (y-o-y). We expect to grow by 12 per cent in the fourth quarter, which means our entire financial year’s growth will be over 20 per cent…So, the whole range of mitigating measures we have taken have really helped us to not only meet but even exceed the capacity guidance,” he stated.

Elbers said the airline will continue with this whole range of mitigating measures going forward. When asked how the pipeline of aircraft — which will be leased from the market — is looking for IndiGo, Elbers replied, “We continue to engage with leasing companies and we continue to explore opportunities which are there.” He, however, emphasised that the airline probably has one of the best order books in the world when it comes to new planes.

“That will also be a natural resource for IndiGo to provide that capacity growth,” he added.

Besides the mitigating measures, one plane per week or more is going to be delivered to IndiGo in the next financial year, and it will help the airline recover from the AOG’s impact, he stated.

Elbers also talked about the hundreds of flight delays and cancellations that took place in December and January. “We faced some challenges in the months of December and January largely due to very adverse weather in large parts of India. In the first week of December, Chennai, which is our fifth largest station with 120 daily departures was impacted due to cyclone forcing us to cancel hundreds of flights and subsequently re-accommodate thousands of customers,” he said.

“The latter half of December and January was characterised by the worst fog that we have probably experienced in many years that led to industry-wide cancellations and delays. Throughout this experience, our operational staff continued to put their best foot forward and we continue to learn lessons from this as we improve even in adverse times,” he added.

First Published: Feb 02 2024 | 11:44 PM IST