“The new A320neo powered by Pratt and Whitney’s fuel efficient geared turbo fan engines will enable us to structurally reduce our costs as fuel continues to be the single largest element of our cost structure. This also marks the beginning of the next phase of our growth and will enable us to make air transportation far more accessible for the people of India.” said Aditya Ghosh, President and Whole-time Director of IndiGo.
In response to numerous questions received by IndiGo over the last few months, the company wants to take this opportunity to provide additional information regarding its short and medium term operational outlook.
The air travel market in India has continued to grow at one of the highest rates in the world. During the last twelve months ended January 31, 2016, total domestic passengers in India increased by 21.0% and, for the same period, total passengers served by IndiGo increased by 35.5%. To address this strong demand, IndiGo has also entered into attractive leases for 7 more used A320 aircraft which will be inducted between March and November of 2016. Overall, on a year-over-year basis, IndiGo expects to grow its fleet by 13 aircraft in the fourth quarter of fiscal 2016, followed by year-over-year increases of 11 aircraft in the first quarter, 21 aircraft in the second quarter, 27 aircraft in the third quarter and 24 aircraft in the fourth quarter of fiscal year 2017.
Also, in the fourth quarter of fiscal year 2016, while year-over-year capacity is expected to grow by about 19%, EBITDAR margins are expected to be strong at around 35% to 37% and at last year’s levels. However, for the fourth quarter, year-over-year revenue is expected to increase by 6% to 8% and net profit will also be impacted due to the exchange rate movement in the Indian Rupee versus the US Dollar.
For fiscal 2017, total fleet strength is expected to increase by about 22.4% on a year-over-year basis allowing IndiGo to absorb the additional manpower in its operations that were hired in expectation of taking delivery of 9 A320neo aircraft between December 2015 and March 2016.
Mr. Ghosh further stated, “With the resolution of the delivery of A320neos, IndiGo expects to continue with its strong operating performance, growth in profitability and healthy cash generation. India remains one of the most underpenetrated aviation markets in the world. The combination of our unique structural cost advantages, superb product quality and large fuel efficient aircraft orders, would enable us to deliver superior financial performance for a long period of time.”