InterGlobe Q4 profit down to a fourth on higher fuel costs, lower yields

Stung by high fuel costs, decline in yields and adverse foreign exchange, IndiGo’s parent company InterGlobe Aviation’s March quarter net profit slumped to almost a fourth of last time’s to Rs 117.6 crore. It had reported a profit of Rs 440.30 crore in last year’s March quarter.

Aircraft fuel expense rose 33.5 percent to Rs 2,337.7 crore in March quarter. The company accounted for the fuel at Rs 61.78 for a litre, it being costlier by 11.6% from the March quarter of 2017.

Not just expenses on jet fuel, all other expenses including staff costs, finance charges and aircraft rentals rose too.  Total expenses rose 30.2% to Rs 5890.6 crore. Yield was down 5.6 percent to Rs 3.31.

Revenue was up by almost a fifth to Rs 5799.1 crore. Margin at the level of earnings before finance income and cost, tax, depreciation, amortisation and aircraft and engine rentals margin was down 811 basis points to 19.4 percent. One basis point is equal to one-hundredth of a percentage point.

Passenger load factor improved by 280 basis points to 88.9 percent.

InterGlobe share price closed down 3.2 percent at Rs 1,355 ahead of earnings announced after market hours. In the post-earnings analyst call, Indigo promoter Rahul Bhatia exuded confidence about the airline's outlook.

“We have added 3 ATRs this quarter and will be adding 6 new aircraft by end of 2018. We will also be adding five new destinations this year,” Bhatia said.