Years of profit and maintaining a lean operations has helped IndiGo’s Rahul Bhatia build up a substantial war chest. Today, that war chest is aiding the airline to keep its head in the skies despite the losses and the inhospitable atmosphere.
Rahul Bhatia is a proud man and not the one to be easily fazed by headwinds. The woes afflicting Indian aviation these days are a bother, particularly for the man who crunches the lead numbers in the airline industry. The simple fact of life is: If airline IndiGo bleeds, it is a no-brainer that the rest of the industry will have blood all over the floor.
But he is sanguine and states often that the balance sheet is a reflection of the times we live in. Deep within, though, he believes that what will see them through is the mantra that he has followed in mission mode from the day 6E did its first flight to Guwahati: a strong balance sheet and a lean and structured operations. While the fall in profit started three quarters ago, the combination of high oil prices, weak rupee and fares have flown the blue airline into red. There is really nothing Rahul can do excepting to keep chipping away at costs, run a tight ship and hope that passenger revenue will get a boost through greater fares (so far a pipedream!).
“Aviation in India is facing significant pressures from high fuel costs, rupee depreciation and intense competition, all of which have impacted our profitability this quarter. Despite this difficult environment, IndiGo remains wellpositioned, thanks to our low-cost structure and strong balance sheet,” he told an investor’s call soon after announcing the earning for the quarter.
In clinical terms here is a dissection of IndiGo’s second quarter:
First ever quarterly loss of 652.1 crore for July-Sep tember 2018 since its listing three years ago, compared to a profit of 551.6 crore in the same period last year.
IndiGo's expense on jet fuel (the present price is close to all time high prices in India) rose to 3,035.5 crore in Q2, up 84 per cent from 1,647.3 crore in the same quarter last year.
This story is from the November 2018 edition of Cruising Heights.
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This story is from the November 2018 edition of Cruising Heights.
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