The country's largest airline IndiGo is working on a proposal to wet lease planes in order to meet its capacity addition guidance for 2022-23, the airline's Chief Executive Officer Pieter Elbers said.
In a post-earning conference call held on November 4, Elbers said that IndiGo is in the final stages of signing an agreement to wet lease some aircraft in order to meet the 13-17 percent capacity addition aim for 2022-23.
However, he said that further detail about the type of aircraft could not be disclosed at the moment.
Elbers added that while IndiGo is confident of higher passenger load factors going forward, due to disruptions in the global supply chain of aircraft, it will need some more time before providing its capacity addition guidance for 2023-24.
News reports emerged in October that IndiGo would soon lease up to four wide-body Boeing 777 planes to cover the shortfall in its international operations.
Reports said that IndiGo will induct up to four Boeing 777 aircraft on a wet-lease basis, including Boeing 777-200 LRs and Boeing 777-300 ERs, which will be deployed, especially on international routes, in the upcoming winter schedule.
Interglobe Aviation, the parent firm of low-cost carrier IndiGo, on November 4 reported a net loss of Rs 1,583.33 crore in the second quarter of fiscal year 2022-23.
The net loss in Q2 FY23 increased as against Q2 FY22, when it stood at Rs 1,435.65 crore, and significantly widened as compared to the first quarter of the current fiscal, when it came in at Rs 1,064.26 crore.
IndiGo's revenue from operations in the September 2022 quarter climbed to Rs 12,497.58 crore, which is 122 percent higher as compared to Rs 5,608.49 crore clocked in the year-ago period.
The company recorded an EBITDAR of Rs 229.2 crore, with a margin of 1.8 percent, as against an EBITDAR of Rs 340.8 crore (6.1 percent margin) in the corresponding quarter of the last fiscal.
IndiGo's management also added that it was reasonably confident that it will achieve operational profitability in October-December as they expect passenger load factors to improve in the ongoing quarter and don't expect ticket prices to fall.
"We expect a 25 percent on-year rise in passenger load in Q3FY23," the airline's chief financial officer Gaurav Negi said.
The airline also said that its advance bookings patterns have reached pre-COVID levels.
IndiGo's CFO added that airlines in India are also likely to benefit from the new pricing mechanism to price air turbine fuel in India.
Negi said that oil marketing companies and airlines in India are discussing to set MOPAG (Mean of Platts Arab Gulf) as the global benchmark to determine jet fuel prices in India, which is likely to provide more clarity on jet fuel taxation to airlines.
Negi added that IndiGo's finance costs have mostly risen due to the depreciating value of the Indian rupee and not because of a rise in leasing costs.
"We have fixed contracts with leasing companies and our finance costs have risen primarily due to a rise in foreign exchange losses," Negi said.
He added that IndiGo does not plan to hedge its fuel costs or foreign exchange losses in the short term as the cost of hedging is very expensive for IndiGo and volatility in both those parameters makes hedging risky.
However, Negi added that IndiGo does not expect the Indian rupee to depreciate significantly going forward.
IndiGo also plans to add another Airbus A321 freighter aircraft to its fleet by December and expects to add more such aircraft in 2023-24.
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