CONFERENCE CALL - from Capital Markets
Delay in delivery of Neo Airbus aircrafts can lead to some lower than anticipated yields
Interglobe Aviation (Indigo) held its conference call on 21st Jan 2016 which was addressed by Aditya Ghosh Whole Time Director
Average fuel prices for Dec'15 quarter was lower by 31% on YoY basis and average rate per ticket is down by around 14% to Rs 4517 per air ticket on YoY basis.
As per the management, while the company has passed on some benefits of lower fuel costs to the customers, given the further fall in crude oil prices, some more benefits will be passed on. Government in view of lower crude oil prices is also reducing the ATF prices and so accordingly, the benefits will be passed on eventually.
The company has started flights operating from Delhi and Mumbai to Udaipur during Dec'15 quarter. With this, the company is now flying to around 34 destinations including international. Average about 646 flights operate on a daily basis.
The load factor was up by 340 bps on YoY basis to 84.6% for Dec'15 quarter. The company flew about 83.30 lakh passengers up by 28% YoY. Management expects further lower fuel oil prices, will further stimulate the demand.
The company has added 3 additional aircrafts during the Dec'15 quarter. Average fleet age of Indigo stands at around 4.2 years.
As per the management, Chennai flood had limited impact on the overall performance of the company for Dec'15 quarter.
There was a delay in delivery of Neo Airbus from the Airbus Airlines due to some industrial issues which the company is facing. As a result Indigo may not be able to meet the guidance of 111 Aircrafts on Mar'16. The current aircraft fleet stands at 101.
As per the management, there is no update on the schedule of the delivery of aircrafts from the airbus. This can lead to some delay and thus, affect some yield and margin benefits that were discussed during the public offering.
The company had taken some 22 aircrafts on lease basis and 17 of them have already been delivered.
During the Dec'15 quarter, the company continued to invest heavily in pilots and other ground staffs. These had lead to some increase in employee costs. Further as 60% of company's total costs are in US $, due to rupee depreciation, costs were higher on YoY basis.
As per the management, there is not much competition seen on price cutting etc.
The company has cash and equivalent of Rs 5746 crore as on Dec'15 and debt of Rs 3930 crore. Management expects some debt to be paid in Mar'16 quarter.