InterGlobe Aviation, the largest domestic airline by market share, posted 75% drop in net profit to Rs 190.89 crore despite 28% jump in total income from operation to Rs 7,916.22 crore for the third quarter ended December 2018, hurt by adverse impact of rupee depreciation, higher fuel prices and the competitive fare environment. Aircraft fuel expenses rose 69% to Rs 3,410.37 crore. Operating margin (OPM) reduced to 2.8% from 16.7% in corresponding previous quarter. Thus, Operating profit (OP) declined 79% to Rs 219.24 crore.

For the quarter, passenger ticket revenues were Rs 7,065.90 crore, an increase of 32.8% and ancillary revenues were Rs 805.10 crore, an increase of 15% compared to the same period last year. Total expenses for the quarter ended December 2018 were Rs 8,038.50 crore, an increase of 50.6% over the same quarter last year. CASK excluding fuel was Rs 2.04, an increase of 6.3% over the same quarter last year. The Company CASK excluding fuel was majorly impacted by the adverse movement in foreign exchange in the quarter. Excluding the impact of currency depreciation, Company CASK excluding fuel decreased by 0.4% over the same period last year.

Commenting on the quarter performance, Mr. Rahul Bhatia, Company's co-founder and interim CEO, said Looking at this last quarter, I would like to make the following points - We have posted a profit of INR 1.9 billion in a continued difficult environment and have grown our fleet by one aircraft a week for a 33% capacity increase for the quarter. Very few airlines around the world have the operational resilience to absorb such rapid growth and I want to thank all our employees for being up for this challenge. Just as importantly, we find that the markets we serve are responding very positively to this new capacity. That is evidenced by the fact that after continued weakness in October which pulled down our overall quarterly performance, our RASK numbers have improved in November and December. We are building a very strong platform for sustainable future growth and profitability.

Key Highlights

Network and Fleet

As of 31st December 2018:

• Fleet of 208 aircraft including 127 A320ceos, 66 A320neos, 1 A321neo and 14 ATRs; a net increase of 19 aircraft during the quarter.

• Operated a peak of 1,336 daily flights including international operations during the quarter.

• Service to 64 destinations including 15 international cities; added 6 international and 1 domestic destination during the quarter.

Operational Performance

• For the period October-December 2018, the Company had a Technical Dispatch Reliability of 99.87%, on-time performance of 79.1% at four key metros and flight cancellation rate of 0.45%.

• Ranked as one of the best airlines amongst the top 20 mega airlines globally for on-time performance for the year 2018 by OAG.

Quarterly Performance

The total income from operation inclined 28% to Rs 7,916.22 crore for the third quarter ended December 2018. For the quarter, passenger ticket revenues were Rs 7,065.90 crore, an increase of 32.8% and ancillary revenues were Rs 805.10 crore, an increase of 15% compared to the same period last year.

Total expenses for the quarter ended December 2018 were Rs 8,038.50 crore, an increase of 50.6% over the same quarter last year. CASK excluding fuel was Rs 2.04, an increase of 6.3% over the same quarter last year. The Company CASK excluding fuel was majorly impacted by the adverse movement in foreign exchange in the quarter. Excluding the impact of currency depreciation, Company CASK excluding fuel decreased by 0.4% over the same period last year.

OPM reduced to 2.8% from 16.7% in corresponding previous quarter. As percentage to sales and net of stock adjustments, aircraft fuel expenses increased to 43.3% from 32.8%, while Aircraft & engine lease rentals cost rose 210 bps to 17.5%. Thus, OP declined 79% to Rs 219.24 crore.

Other income gained 36% to Rs 313.15 crore. With 63% jump in interest cost to Rs 137.68 crore and 90% rise in depreciation cost to Rs 203.83 crore, the Profit Before Tax (PBT), as a result, decreased 82% to Rs 190.89 crore. With NIL taxation during the quarter as compared tax outflow of Rs 309.57 crore in corresponding previous quarter, net profit declined by 75% to Rs 190.89 crore.

Nine Months ended December performance

For Nine Months ended December 2018, total income from operation inclined 20% to Rs 20,613.51 crore. OPM turned to -3.9% from 16.7% corresponding previous period. The turnaround of operating margin to negative led Operating Loss (OL) of Rs 796.80 crore from Operating profit (OP) of Rs 2,867.51 crore corresponding previous period.

Other income inclined 46% to Rs 948.40 crore. With 52% rise in interest cost to Rs 376.38 crore and 76% jump in depreciation cost to Rs 541.06 crore, the Loss Before Tax (LBT), as a result, was Rs 765.85 crore as compared PBT of Rs 2,960.47 crore in corresponding previous period. The tax credit for the period was Rs 332.40 crore as against tax outflow of Rs 835.74 crore in corresponding previous period. Thus, the company booked net losses of Rs 433.45 crore as compared to net profit of Rs 2,124.73 crore in corresponding previous quarter.

Annual Financial Performance

For the financial year ended March 2018 (FY 2018), the total income from operation inclined 24% to Rs 23,020.89 crore. Operating margin (OPM) has increased by 130 bps to 12.8%, thus, gain in OPM leads to incline in Operating Profit (OP) by 38% to Rs 2,956.51 crore. Other income inclined 20% to Rs 946.86 crore, thus, the PBDIT gained 33% at Rs 3,903.37 crore. With 3% jump in interest cost to Rs 339.82 crore but 4% drop in depreciation cost to Rs 436.88 crore, the Profit Before Tax (PBT), as a result, grew 46% to Rs 3,126.68 crore. The tax outgo gained 82% to Rs 884.30 crore. Effective tax rate grew 570 bps to 28.3%. Thus, net profit jumped 35% to Rs 2,242.37 crore.

Cash and Debt

• As of 31st December 2018, IndiGo had a total cash balance of Rs 14,136.10 crore comprising of Rs 4,618.30 crore of free cash and Rs 9,517.80 crore of restricted cash.

• The total debt as on 31st December 2018 was Rs 2,475.90 crore. The entire debt for IndiGo is aircraft related.

Future Capacity Growth

• Fourth quarter fiscal 2019 year over year capacity increase in ASKs is expected to be 34%

The scrip hovers around Rs 1107.95 (23 January 2019) on the BSE.

InterGlobe Aviation: Standalone Results