Highlights of the Concall

• The Company posted net loss of Rs 652.13 crore despite 17% jump in total income from operation to Rs 6,185.31 crore for the second quarter ended September 2018, hurt by adverse impact of rupee depreciation, high fuel prices and the competitive fare environment. Aircraft fuel expenses rose 84% to Rs 3,035.50 crore. Operating margin (OPM) turned negative (-16.2%) from 14% corresponding previous quarter. Thus, company booked Operating Loss (OL) of Rs 1004.97 crore as against Operating profit (OP) of Rs 738.15 crore corresponding previous quarter.

• The Company average aviation fuel price during the quarter was 40% higher than the same period last year. Fuel is about 40% of total costs. After adjusting for the increased volumes, this increase in fuel price resulted in higher fuel costs of Rs 9.1 billion compared to the same period last year. The Indian rupee also depreciated significantly during the quarter and closed at 72.58 rupees per U.S. Dollar. Based on this, we booked a foreign exchange loss of Rs 3.4 billion compared to a loss of Rs 0.5 billion during the same period last year. The currency depreciation also had an adverse year over year impact of Rs 1.4 billion on the company dollar denominated expenses. So, the overall impact of currency depreciation increased the company costs by Rs 4.3 billion compared to the same period last year.

• For Q2FY19, passenger ticket revenues were Rs 5285.20 crore, an increase of 17.2% and ancillary revenues were Rs 716.70 crore, an increase of 12.8% compared to the same period last year. Total expenses for the quarter ended September 2018 were Rs 7502.30 crore, an increase of 58.2% over the same quarter last year.

• The Company total capacity for the September quarter was 19.5 billion ASKs, an increase of 28.9% compared to the same period last year. RASK for the quarter was Rs 3.23 compared to Rs 3.52 during the same quarter last year, a decline of 8.1%. This decline in RASK was primarily driven by a decrease in yields. The Company yields was down by 9.7% to Rs 3.21 while load factors were nearly flat at 84.5%.

• The Company year over year fuel price increase of 40% led to an overall CASK increase of 24.1%. CASK for the quarter was Rs 3.74 rupees compared to Rs 3.01 during the same period last year. CASK excluding fuel was Rs 2.18 in the quarter, an increase of 13.5% from the same period last year primarily because of the adverse effect of foreign exchange. The foreign exchange loss combined with the impact of currency depreciation on the Company dollar denominated expenses resulted in an 11.2% increase in CASK excluding fuel. Excluding the impact of foreign exchange, CASK excluding fuel went up by only 2.3% despite inflationary pressures.

• As of 30th September 2018, the Company has of 189 aircraft including 127 A320ceos, 50 A320neos and 12 ATRs; a net increase of 20 aircraft during the quarter. The Company has operated a peak of 1,294 daily flights including international operations during the quarter. The Company serviced to 57 destinations including 9 international cities; added 4 domestic and 1 international destination during the quarter.

• As of 30th September 2018, the Company had a total cash balance of Rs 13163.70 crore comprising of Rs 4417.50 crore of free cash and Rs 8746.20 crore of restricted cash. The Company total debt as on 30th September 2018 was Rs 2641.10 crore. The entire debt for IndiGo is aircraft related. IndiGo does not have any working capital debt.

• The Company has taken several steps to create efficiencies and improve productivity. For example, Company adopted various initiatives to reduce the fuel burn on planes by reducing weight and improving navigation and landing procedures. The Company also improved the productivity of airport operations through better cross utilization of resources. The Company refined maintenance schedule to improve aircraft utilization by carrying out activities during the night.

• The Company revised up guidance a year over year capacity increase in terms of ASKs to 35% for Q3FY19 and capacity increase to 30% for FY19.