IndiGo owner sees more flyers after record profit, Jet collapse helps

Interglobe Aviation Ltd, the operator of India’s top airline IndiGo, said on Friday that it expected passenger capacity to grow by nearly a third this fiscal year, as the company posted a record quarterly profit, gaining from the collapse of Jet Airways.

Interglobe and its peer SpiceJet Ltd have both seen a surge in passenger growth, after Jet Airways, once the country’s biggest private carrier, declared bankruptcy. IndiGo is now India’s largest airline by market capitalisation.

However, the company does not expect gains from Jet’s shut down to last in the longer term.

“We do not expect any meaningful impact of Jet Airways to continue as all airlines have now replaced the capacity vacated by Jet,” Chief Executive Officer Ronojoy Dutta said in a conference call with analysts after results.

In the near term, Interglobe expects available seat kilometres (ASK), a measure of its passenger carrying capacity, to grow 30% in the financial year ending March 2020 and sees a 28% jump in the current quarter.

The company, in the middle of a spat between its co-founders, said it had submitted a report on a review by auditors Ernst & Young to the market regulator.

“We don’t intend to make the report public at this time,” Dutta said, adding that the company’s board meeting will continue on Saturday.

IndiGo co-founder Rakesh Gangwal had earlier alleged violations of corporate governance rules at the parent group and asked the country’s securities regulator to intervene. Dutta had then sought to allay concerns and asked employees to remain focused on running the airline.

EY had conducted an independent review on the company after the allegations, but found no major lapses, according to media reports.

Dutta did not elaborate further on the proceedings.

The ongoing spat, however, did not hit IndiGo's quarterly performance. The New Delhi-based company's net profit here for the three months ended June 30 surged to over 12 billion rupees ($174.29 million) from 277.9 million rupees a year ago. Revenue rose 45% to 94.2 billion rupees.

“Strong passenger revenues along with a sharp improvement in cargo performance were key drivers to this improved profitability,” Dutta said.

IndiGo’s yield, a measure of the average passenger fare per kilometre, rose 12.8% during the quarter, reflecting the rising passenger preference for the airline, while its ASK rose 30.3% during the period.

Interglobe shares closed 0.28% higher on Friday, amid a broader market that ended 1.53% down.

($1 = 68.8500 Indian rupees)