January
23, 2019
MANAGEMENT:
MR. RAHUL BHATIA – CO-FOUNDER AND INTERIM CEO
MR.
RONOJOY DUTTA – PRINCIPAL CONSULTANT
MR.
ROHIT PHILIP – CHIEF FINANCIAL OFFICER
MR.
WILLIAM BOULTER – CHIEF COMMERCIAL OFFICER
MR.
WOLFGANG PROCK-SCHAUER – CHIEF OPERATING OFFICER
MR.
ANKUR GOEL – AVP, TREASURY AND INVESTOR RELATIONS Page 2 of 5
IndiGo January 23, 2019
Operator: Good
evening ladies and gentlemen and welcome to IndiGo’s Conference Call to discuss
the third quarter fiscal year 2019 financial results. My name is Stanford and I
will be your coordinator. At this time, the participants are in a listen-only
mode. A question-and-answer session will follow today’s management discussion.
As a reminder, today’s conference call is being recorded. I
would now like to turn the call over to your moderator, Mr. Ankur Goel,
Associate Vice President of Treasury & Investor Relations for IndiGo. Thank
you and over to you sir.
Ankur Goel: Good Evening, everyone, and
thank you for joining us for the Third Quarter Fiscal Year 2019 Earnings Call.
We have with us our co-founder and interim Chief Executive
Officer – Rahul Bhatia and our Chief Financial Officer - Rohit Philip to take
you through our performance for the quarter. Ronojoy Dutta, our Principal
Consultant, Wolfgang Prock-Schauer, our Chief Operating Officer and Willy
Boulter, our Chief Commercial Officer are also with us and available for the
Question and Answer session.
Before we begin, please note that today’s discussion may
contain certain statements on our business or financials which may be construed
as forward-looking. Our actual results may be materially different from these
forward-looking statements.
The information provided on this call is as of today’s date
and we undertake no obligation to update the information subsequently.
A transcript of today’s call will also be archived on our
website. We will upload the transcript of today’s prepared remarks within an
hour. The transcript of the Question and Answer session will be uploaded
subsequently.
With this, let me hand over the call to Rahul Bhatia.
Rahul Bhatia: Good evening everyone and thank
you for joining us on this call.
We announced our third quarter fiscal 2019 financial results
today.
This quarter, we reported a profit after tax of 1.9 billion
rupees with a profit margin of 2.4%. Though we have seen a reduction in fuel
prices during the quarter compared to the previous quarter, on a year over year
basis, fuel prices are still 31% higher and the Indian rupee is weaker by 11%.
Both these factors have impacted our profitability compared to the same period
last year. Our unit revenue was down year over year but we saw an improvement
in revenue performance during the quarter. It was encouraging to see a
year-on-year improvement in RASK in November and December on account of
improvement in the fares in the 0-15 day window. Rohit will talk Page 3 of 5
IndiGo January 23, 2019
about this when he takes you
through our financial performance in detail.
As we have said before, we are focused on building a large
and profitable air transportation network in and out of India and are adding
capacity in line with our long term growth plan.
We added a net of 19 aircraft this quarter and ended the
quarter with a total fleet of 208 aircraft. This has enabled us to expand our
network both domestically and internationally.
Talking about our domestic operations first, we have
increased our daily domestic departures by 75 flights per day during the
quarter. While some of the metro airports are getting slot constrained, we are
encouraged with the growth that we are seeing in tier 2 and tier 3 cities.
In addition to our focus on our domestic network, we have
also strengthened our international presence. We started operations from 6 new
international destinations and added 22 international routes during the
quarter. Moreover, as part of our international expansion strategy, we have
entered into our first codeshare and mutual cooperation agreement with Turkish
Airlines. This will allow IndiGo customers to reach several European
destinations beyond Istanbul.
Our unit costs, excluding the impact of fuel and foreign
exchange, declined on a year-on-year basis. Moreover, as we add more A320neos and
A321neos in our fleet, we expect further unit cost improvements. Maintaining
our cost leadership is fundamental to our business and I am happy that we
remain firmly on track to reduce our unit costs further.
We also remain focused on our operational performance. We
were ranked as one of the best airlines for the second consecutive year amongst
the top 20 mega airlines globally in terms of on-time performance based on the
data compiled by OAG. IndiGo is the only Indian airline to have made it to this
list. During the quarter, we had an on-time performance of 79.1%, Technical
Dispatch Reliability of 99.87% and a flight cancellation rate of 0.45%.
Now let me take a step back and recap the year that has gone
by. Going into the year, we set ourselves very ambitious growth targets to tap
into this very unique opportunity that the Indian market presents. Over the
last 1 year, we have taken delivery of 55 aircraft, roughly one aircraft a
week. Not many aviation companies globally have the resilience and the organizational
strength to grow this rapidly and still continue delivering strong operational
performance. We have delivered on all parameters – be it ensuring adequate
availability of pilots and cabin crew, growing the network to new markets,
strengthening the internal processes and improving efficiencies. I would like
to thank all our employees, especially the operational staff for their
tremendous performance. In past, we have focused on setting up the right
network domestically. Now with this in place, we are looking to strengthen our
international presence. We have received our first A321 neo which has a higher
seating capacity and lower unit costs compared to the A320neos and also has
longer range. We plan to start direct flights to Istanbul from March and open
other international destinations as the year progresses.
Overall, I am happy with the way we have grown so far and
remain very excited with what lies ahead. Page
4 of 5
IndiGo January 23, 2019
With this, let me hand over the
call to Rohit for a detailed overview of our financials.
Rohit Philip: Thank you Rahul and good
evening everyone.
For the quarter ended December 2018, we reported a profit
after tax of 1.9 billion rupees compared to a profit after tax of 7.6 billion
rupees during the same period last year. We reported an EBITDAR of 16.8 billion
rupees with an EBITDAR margin of 21.2% compared to an EBITDAR of 20 billion
rupees with an EBITDAR margin of 32.4% during the same period last year.
As Rahul mentioned, our profitability was lower compared to
last year mainly on account of the increase in fuel price and the depreciation
of the Indian rupee.
The average aviation fuel price in India during the quarter
was 31% higher than the same period last year. After adjusting for the
increased volumes, this increase in fuel price resulted in higher fuel costs of
7.3 billion rupees compared to the same period last year.
The Indian rupee closed at 69.71 rupees per U.S. Dollar. The
average exchange rate for the quarter was 72.1 rupees compared to 64.8 rupees
in the same quarter last year. This had an adverse year over year impact of 2.7
billion rupees on our dollar denominated expenses.
Our total capacity for the December quarter was 21.6 billion
ASKs, an increase of 32.9% compared to the same period last year.
Our revenue from operations in the December quarter was 79.2
billion rupees, an increase of 28% over the same period last year. Our other
income was 3.1 billion rupees for the quarter.
Our RASK for the quarter was 3.70 rupees compared to 3.82
rupees during the same quarter last year, a decline of 3%. While in October,
our RASK showed a similar decline as it has in previous months, we saw a much
better RASK performance in November and December. This improvement in our RASK
performance was largely because of improvement in yields especially in the 0-15
day booking window during these months. For the quarter, our yields were up by
3.7% to 3.83 rupees while our load factors were down by 3.2 points at 85.3%.
Our CASK for the quarter was 3.61 rupees compared to 3.16
rupees during the same period last year, an increase of 14.5%. This increase
was primarily driven by increase in fuel prices and currency depreciation. The
currency depreciation also impacted our CASK excluding fuel and as a result,
our CASK excluding fuel was 2.04 rupees in the current quarter, an increase of
6.3% from the same period last year. Excluding the impact of foreign exchange,
our CASK excluding fuel reduced by 0.4%. We remain relentlessly focused on
maintaining our cost advantage and have taken various steps to create
efficiencies and further improve productivity across the organization.
Our balance sheet continues to remain strong. Our cash
balance at the end of the period was 141.4 billion rupees comprised of 46.2
billion rupees of free cash and 95.2 billion rupees of restricted cash.
Before I close my remarks, let me give you our capacity
guidance for the coming quarter. We expect a year over year capacity increase
in terms of ASKs of 34% for the fourth quarter.
With this, let me hand it back to Ankur.
The above prepared remarks transcript will be
replaced with a full conference call transcript (including the Q&A portion)
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