Indian low-cost giant IndiGo recorded a ₹1,174 crore ($156.8mn) loss for the first quarter of 2021. January-March was one of the strongest quarters for the airline in the last year, buoyed by a rebounding domestic market. However, a lack of international flights and the second wave of COVID-19 both impacted the bottom line.
Another tough one
The first quarter of 2021 was stronger for IndiGo than the previous ones. The airline only saw a 25% drop in revenue this quarter compared to the same time last year. Revenues of ₹6,229 crores ($851 million) marked a notable recovery after a challenging 2020.
However, IndiGo recorded a net loss of ₹1,174 crores ($158.6mn) for Q1, up from ₹620 crores ($84.7mn) in the last quarter. The losses were led by lower activity due to the pandemic as well as ballooning fuel prices, both of which pushed the airline further into the red.
The biggest impact of the pandemic came in mid-March when India’s second wave first began and cases began to tick up across the country. By the end of the month, cases were at their highest in months, hurting passenger figures. However, January-March also saw the domestic market hit new post-pandemic peaks, including highs of over 300,000 daily passengers at the end of February.
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However, despite rebounding traffic earlier this year, IndiGo has faced its struggles. Firstly, international flights remain negligible, with only a few markets like the UAE and Maldives open to Indian tourists (which are now closed as well). This means a full revenue recovery remains far away until border controls are eased.
The second factor was rising fuel costs. With more flights in the skies and prices steadily rising, IndiGo’s costs went up a massive 67% from last quarter. With ₹1,914 crores ($261.6mn) going only to fuel, clearly surging prices put a huge dent in this quarter’s financials.
The fallout of the COVID-19 pandemic continues to cast a wide shadow over IndiGo’s operations, with CEO Ronojoy Dutta saying,
“This has been a very difficult year with our revenues slumping hard due to covid, showing some signs of recovery during the period December to February and then slumping again with the second wave of the covid. While we have seen a sharp decline in revenues in March through May, we are encouraged by the modest revenue improvements starting last week of May and continuing through June.”
More to come
While Q1’s results left a lot to be desired, airlines will likely suffer more in the next quarter as well. April and May saw passenger traffic fall dramatically, reaching lows of 56,000 daily flyers. This drop will see airline revenues follow in the same direction, with carriers slashing capacity in response.
With the government intervening to cut capacity to 50% and imposing fare caps, Indian aviation is unlikely to recover any time soon. For now, airlines can only hope to survive this crisis and come out on the other side.
What do you think about IndiGo’s quarter? How will airlines do in the future? Let us know in the comments!