IndiGo reports highest profit, board meet continues amid promoters' tussle

In the midst of a tussle between promoters, InterGlobe Aviation, which operates the country’s largest airline by market share IndiGo, has recorded its highest net profit at Rs 1,203 crore for the June quarter with a more than 40-fold rise from the same period last year.
That’s not the only first for the company. In a departure from the regular practice, the company’s board meeting has been stretched to two days. The board on Friday discussed a “range of issues”, including appointment of a woman director, and the meeting will continue on Saturday, IndiGo Chief Executive Officer Ronojoy Dutta said.
Along with the appointment of women directors, the board’s size will also be expanded to 12 directors from the current six. In the new board, Rahul Bhatia’s InterGlobe Enterprises (IGE) will have the right to nominate six directors and Rakesh Gangwal will nominate two. In addition, there will be four independent directors.
The company is learnt to have approached Indra Nooyi, former CEO of beverage giant Pepsico, and Neelam Dhawan, former India head of HP, for board appointment.
In the post-results analyst call on Friday, foreign portfolio investors grilled Dutta over why the findings of the EY audit report have not been shared with shareholders. Co-promoter Rakesh Gangwal had earlier said the report meant to check the legality of the related party transactions of the company had not been shared with board members. “We request the company to share the EY report with the shareholders. It would give us clarity,” said Avinash Vazirani, Fund Manager (Emerging Markets) at Jupiter Capital.
While IndiGo’s net profit has soared to Rs 1,203 crore during the April-June quarter from Rs 27 crore in the corresponding period last year, its revenue rose 45 per cent to Rs 9,420 crore on the back of strong passenger revenues and a sharp improvement in cargo performance.
CEO Dutta attributed the rise primarily to the vacuum created by Jet Airways, offering IndiGo the scope to increase its fare and yield. He however warned that moving forward, this kind of bumper profit may not be sustainable. “The situation in the second quarter, which is the toughest for airlines in India, will definitely improve compared to last year but how much it would improve is yet to be determined,” Dutta said.
Sales jumped 42 per cent in the June quarter to Rs 9,420 crore from the comparable period a year ago. IndiGo’s sales and market share have been steadily increasing in the recent past even as rival Jet Airways got grounded in April due to severe liquidity crunch.
Revenue per available seat kilometre — a metric which shows how much the airline earns by operating one seat for one kilometre, rose 10.7 per cent to Rs 4.10 while yield per kilometer rose 13 per cent to Rs 4.08. Cost per available seat kilometer reduced by 6.3 per cent.
As of June end, IndiGo had cash reserves of Rs 17,337 crore. As a result of an accounting standard change, IndiGo's debt is pegged at Rs 18,430 crore. In the account books, this reflected in a decline in rental expenses and an increase in finance and depreciation costs.
The dispute between IndiGo founder Rahul Bhatia and his estranged partner Rakesh Gangwal, however, comes as a distraction to its managers at a time when carriers are competing to fill the gap left by bankrupt Jet Airways. Analysts pointed out that if the dispute is not settled quickly, it may dent investor confidence, delay decisions on key issues, invite avoidable regulatory attention and force the carrier to cede space to rivals.

IndiGo posts PAT of Rs 1,203 crore for Q1, revenue jumps 45% YoY

InterGlobe Aviation, parent of IndiGo airline, on Friday reported a net profit (PAT) of Rs 1,203 crore for the April-June quarter of financial year 2019-20 (Q1FY20), up 4,229.7 per cent year-on-year (YoY) from Rs 27.8 crore in Q1FY19. The profit rose 102 per cent on a sequential quarter basis. This was the airline's highest ever quarterly profit.
The profit beat analysts’ expectations, who had estimated a profit between Rs 608 crore and Rs 859 crore. For the quarter under review, the revenue stood at Rs 9,420.1 crore, up 44.65 per cent YoY from Rs 6,512 crore in Q1FY19, Interglobe Aviation said in a release.
Click here for the detailed break-up of Q1 numbers
The airline registered a 169.4 per cent rise YoY in earn earnings before interest, tax, depreciation, amortization, and rent (EBITDAR) at Rs 2,778.5 crore. The same was Rs 1,031.3 crore in Q1FY19 and Rs 2,056.3 crore in Q4FY19. Yield during the quarter under review came in at Rs 4.08/ km, up 12.8 per cent YoY. The EBITDAR margin came at 29.5 per cent.

CLICK HERE TO READ ANALYSTS' EXPECTATIONS
"I am pleased to report our highest ever quarterly profit after tax. Strong passenger revenues along with a sharp improvement in cargo performance were key drivers to this improved profitability. We are particularly pleased with this quarter because it demonstrated our ability to grow rapidly while simultaneously expanding our margin performance," said Ronojoy Dutta, the CEO of Interglobe Aviation in a release to the exchanges.
For the June 2019 quarter, their passenger ticket revenues came in at Rs 8,445.1 crore, an increase of 46.4 per cent and ancillary revenues were Rs 902.6 crore, an increase of 32.2 per cent compared to the same period last year.
Total expenses for the quarter stood at Rs 8,277.5 crore, an increase of 22 per cent over the same quarter last year. Cost Per Available Seat Mile (CASM / CASK), excluding fuel, was Rs 2.1, a decrease of 2.8 per cent over the same quarter last year.
"Excluding the impact of foreign exchange, our CASK excluding fuel increased by 2.6 per cent for the quarter," a company release said. The fuel cost shot up by 15 per cent sequentially to Rs 3,136 crore in the June quarter.
In the March quarter, the airline expanded its fleet to 235 aircraft, up from 217 at the end of March 2019.
“Second quarter fiscal 2020 year over year capacity increase in ASKs is expected to be 28 per cent,” the company said in its release. For the full year, the capacity is projected to grow 30 per cent.

IndiGo's billionaire boss Rahul Bhatia steps in after Aditya Ghosh's exit

InterGlobe Aviation Ltd.’s billionaire director Rahul Bhatia has taken over as an interim chief executive officer after its president and director Aditya Ghosh unexpectedly resigned before a board meeting Friday, the operator of India’s biggest airline said in an exchange filing.
Ghosh is leaving at a time when the airline is changing some of its most successful policies such as moving to a mixed fleet instead of operating a single aircraft class, buying planes outright instead of leasing them, and planning a new low cost, long haul service. Ghosh has been IndiGo’s public face over the years as media-shy billionaire owners Bhatia and Rakesh Gangwal remained away from the limelight.
ALSO READ: Changes might show results, but IndiGo may still miss 'Captain Ghosh'
Ghosh has quit as director from April 26 and will step down as president from July 31, the airlines said in a statement late Friday. He led IndiGo for nearly a decade, growing it to be the nation’s biggest airline.
Under him, IndiGo placed record aircraft orders worth billions of dollars, had a blockbuster IPO and became the biggest budget airline in Asia by market valuation.
Separately, IndiGo said in an emailed statement it would consider appointing Gregory Taylor as president and CEO. Taylor, who was the executive vice president of revenue management and network planning at IndiGo in 2016-2017, has been made senior adviser, the statement added.
ALSO READ: Aditya Ghosh decides to move on after almost a decade in IndiGo cockpit
The company’s spokeswoman and Ghosh didn’t immediately respond to calls seeking comments.
“Ghosh has been instrumental in bringing IndiGo to the top position in Indian aviation over the past 10 years,” Mark Martin, founder and CEO of Dubai-based Martin Consulting LLC., said by phone. “Indigo shares may have a temporary blip as they are overvalued. We don’t expect a major selloff as Indigo still has good leadership and are strongly entrenched in the aviation business.”