Release Date: February 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- InterGlobe Aviation Ltd (BOM:539448, Financial) reported a profit after tax of INR30 billion for Q3 FY2024, with a profit margin of 15.4%.
- The company achieved a significant milestone of operating 2,000 daily flights and served 27 million passengers in the December quarter.
- InterGlobe Aviation Ltd (BOM:539448) added 27% capacity in available seat kilometers year-over-year, with load factors improving to 86%.
- The company expanded its network by adding seven new domestic destinations and six new international destinations during the quarter.
- InterGlobe Aviation Ltd (BOM:539448) launched an AI chatbot, 6Eskai, powered by GPT-4 technology, enhancing customer service and booking efficiency.
Negative Points
- The company faced operational challenges due to adverse weather conditions, including a cyclone in Chennai and severe fog, leading to flight cancellations and delays.
- Supply chain disruptions have resulted in a significant number of aircraft on ground (AOG), with current AOGs in the mid-70s, impacting capacity.
- Despite mitigation measures, the company expects continued headwinds from aircraft groundings in the near term.
- The dynamic nature of fuel prices and foreign exchange depreciation continues to impact operating expenses.
- The company is still in discussions with OEMs regarding compensation for grounded aircraft, indicating ongoing uncertainty in finalizing claims.
Q & A Highlights
Q: What is driving the strong growth in ancillary revenues and other operating income?
A: The large part of other income is financing income, and there are also OEM-related claims received this quarter. The financial statements provide a detailed disclosure on this.
Q: How should we view the other income related to compensation for aircraft grounding?
A: The compensation is partially for costs incurred in the current and prior periods. The cost items are considered in the financial statements, and the claims amount is still being finalized with OEMs.
Q: What is the outlook for FY25 in terms of ASK growth and the situation with Pratt & Whitney engine groundings?
A: We are not discussing FY25 in this call. For FY24, we have consistently met or surpassed our capacity guidance despite supply chain challenges. We will continue with mitigating measures and provide future guidance later.
Q: How many aircraft additions are expected in Q4, and does the guidance of one aircraft per week next year still stand?
A: We expect early double-digit additions in Q4 and maintain the guidance of adding one aircraft per week next year.
Q: How is the industry growth and demand affecting yields in Q4?
A: Despite seasonality, yields are holding up year-over-year. We expect them to continue to hold in February and March, similar to last year.
Q: Have we seen the full cost impact of damp leases in Q3?
A: The full impact will be seen in Q4 as most damp leases started in Q3. The cost impact is offset by revenue, making it neutral.
Q: What is the current situation with aircraft on ground (AOG) and Pratt & Whitney engine supplies?
A: The number of AOGs has increased to mid-70s due to powder metal issues. We are working with Pratt & Whitney on spare engine availability and expect improvements in a few quarters.
Q: How do you see the yields and capacity growth in the next financial year given the supply constraints?
A: Yields are expected to remain strong in Q4 due to capacity constraints and robust demand. The impact of damp lease costs will be limited as they are a small portion of our overall portfolio.
Q: What is the impact of the new DGCA norms on crew fatigue and rest periods?
A: We are assessing the new FDTL regulations and their impact. Safety and fatigue management are priorities, and we will comply with the new requirements while engaging with stakeholders.
Q: How does IndiGo's network advantage compare to competitors, and can it sustain this advantage?
A: IndiGo's extensive network is a significant strategic asset, allowing us to allocate capacity effectively. We continue to build on this network, which has been developed over 17 years, and it remains a strong competitive advantage.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
