IndiGo swings to profit as receding virus ushers in recovery

IndiGo, India’s biggest airline, swung to a surprise quarterly profit, as more people took to the skies after the nation emerged from the most devastating phase of the coronavirus pandemic.

The carrier, operated by InterGlobe Aviation Ltd., posted a profit of 1.3 billion rupees ($17.4 million) in the three months ended Dec. 31, compared with a deficit of 6.3 billion rupees a year had lier, according to a statement Friday. The average forecast from analysts was for a loss of 4.15 billion rupees. Revenue stood at 92.95 billion rupees, an increase from 49.1 billion rupees a year ago.

Indian carriers started to bounce back from the worst of the pandemic last year, with the government allowing local airlines to operate at full capacity as infections ebbed in most places. The emergence of omicron threatens that recovery, with carriers cutting back on capacity as demand starts to plummet once again.

IndiGo warned its capacity will reduce by about 10-15% in the current quarter, compared with the three months ended December. It expects passenger traffic and revenue environment to improve once new infections start receding, according to the statement.

Buoyed by the early signs of a recovery, IndiGo Chief Executive Officer Ronojoy Dutta in November said the carrier is ‘unlikely’ to raise funds through a share sale to institutional investors as previously planned. IndiGo, which is the world’s biggest customer for Airbus SE’s best-selling A320neo jets, is planning to expand international capacity to 40% in five years from 25% by flying to new overseas destinations in the seven-hour range, he said at the time.

Total cash at IndiGo, Asia’s biggest budget airline by market value, stood at 173.2 billion rupees, while its debt rose 27% to 351.5 billion rupees compared with a year ago. Yield—a measure of fares and pricing power—rose 19%.