InterGlobe Aviation - Indigo

Concall highlights:

  • Yield is up by 9% but load factor is down by 18.5% leading to reduction in RASK of 5.4%
  • Before going for equity fund raise of 4000cr., want to explore all debt options. On the basis of current revenue improvements deferring the decision for QIP until the end of 2020
  • Stable liquidity condition as of now and have made all the lease payments (fixed cost) without any deferrals
  • Current domestic capacity operating at 60% and should go up to 80% by end of year (depending on government approvals)
  • Average cash burn was 25cr/day this quarter (vs 30cr/day last quarter)
  • Sold and leased back 4 ATR and 3 CEO planes to raise liquidity; plans to sell and lease back more aircrafts
  • Plans to return all the CEO planes and replace them with more fuel efficient NEOs
  • Pre-covid corporate travel was ~50% of total travel
  • International operations: Only focused on narrow body planes; will not go into wide body until see positive numbers from it (although prices have come down for wide body planes)
  • Residual values have gone down for wide body planes, but the prices of narrow body planes have been largely stable
  • Until 2023, will accept new planes and continue retiring CEOs decreasing overall fleet count slightly. After 2023, fleet count will increase
  • Cargo revenues doing very well YOY; don’t give revenue breakup into cargo and passenger; most of the ancillary revenue comes from cargo

Disclosure: Invested (position size here)