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Covid-19: IndiGo fears material impact on quarterly earnings

New Delhi, March 11 (IANS) Airline major IndiGo on Wednesday said that it expects quarterly earnings to be materially impacted due to the outbreak of coronavirus.

It also pointed out that the rupee has also depreciated sharply which will have an adverse impact on its dollar denominated liabilities primarily on account of capitalised operating leases.

“In January and February 2020, IndiGo experienced modest impact from the coronavirus. We cancelled our flights to China and Hong Kong and reduced frequency to certain other Southeast Asia markets,” the airline said in a filing to the BSE.

“This capacity was redeployed in other markets without having a material impact on our revenues. Over the past few days however, week-on-week, we have seen a 15-20 per cent decline in our daily bookings.”

The airline had reported a 168 per cent jump in net profit to Rs 496 crore in the quarter ended December 31, 2019.

In the corresponding quarter in the previous financial year, the airline had logged in Rs 185.2 crore profit.

In the October-December period of FY20, IndiGo saw its revenue from operations rising 25.5 per cent to Rs 9,931.7 crore. During this period, its capacity growth was 19.3 per cent compared to the same quarter last year.

The company, in an official statement, said that its balance sheet grew stronger with total cash aggregating to Rs 20,068 crore including free cash of Rs 9,412 crore.

Earlier, global industry body International Air Transport Association (IATA) has estimated the combined revenue loss for airlines in the range of $63-113 billion.

In its latest financial impact of novel coronavirus (Covid-19) on airline sector released on March 5, IATA predicted 2020 global revenue losses for the passenger business of $63 billion considering infection is contained in countries with over 100 cases as of March 2.

This scenario considers markets with more than 100 confirmed COVID-19 cases and experiencing a sharp downturn followed by a V-shaped recovery profile.

In case the virus spreads further covering more markets, the losses could almost double to $113 billion thus further affecting the financial health of airlines worldwide.

The projected loss is on account of passenger traffic and does not include cargo operations.

–IANS

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