IndiGo, the country’s largest airline, recorded a loss of ₹870 crore in the final quarter of financial year 2020, as compared to a profit of ₹595 crore during the same period last year as travel restrictions kicked in from January and grounded hundreds of flights in the country.
The survival strategy for the airline during the pandemic will involve “managing cash and liquidity,” IndiGo’s CEO Ronojoy Dutta said in an earnings call. Among the key steps will be to return its 120 A320ceo aircraft and replace them with newer A320neo planes to save maintenance costs on the old variant.
“120 CEOs in our fleet will be going out in the next two years and the rate at which they go out is up to us depending on how the revenue revives. We are in active discussion with Airbus, we will take a large number,” the CEO said.
In its fleet of 262 aircraft, IndiGo already has 100 A320 NEOs and 14 A321 NEOs.
Essentially, the airline will examine its fixed costs with a fine-tooth comb. Fixed costs account for 40% of total costs and also include employee costs, which the airline has tried to control by slashing salaries by 20-30%, deferring increments and doing away with leave without pay.
The airline plans to shore up ₹ 3,000 to ₹ 4,000 crore of additional liquidity in the next nine months.
Until the 120 CEOs are replaced, IndiGo will also curtail flying them to ensure cost efficient operations.
IndiGo is operating 20% of its total planes since the government allowed flight operations on May 25 and its Chief Operating Officer Wolfgang Prock-Schauer said that barring the first two days the airline has seen an average of 70% of seats per aircraft being sold.
“We are seeing reasonably strong loads given the environment. But I also know that this is an issue of pent up demand and I don’t know how it will look end of July we don’t know. But so far so good and since the lockdown has been lifted the revenue picture has been reasonably strong,” Mr. Dutta said.