Interglobe Aviation - Q2 FY24 - Quarterly Earnings Call


1/25/20242 min read


  1. Challenges and Mitigation:

  • Facing headwinds due to aircraft groundings related to engine issues in the Pratt & Whitney supply chain.

  • Received communication from Pratt & Whitney regarding powder metal issues affecting engines.

  • Anticipates higher groundings due to accelerated removals and incremental shop visits from Q4 onwards.

  • Based on information that has been released by Pratt & Whitney in the public domain, the inspection duration could range between 250 to 300 days

  • load factors are generally 300 to 400 basis points lower than the competition

  • Implementing mitigation measures, including retaining and extending aircraft, damp leases, and exploring additional capacity from the secondary market.

  1. Future Outlook:

  • Awaiting service bulletin from Pratt & Whitney for clarity on capacity.

  • Estimates around 25 percent capacity addition in the third quarter on a year-over-year basis.

  • Expects similar trends in yields and load factors compared to the third quarter of the last financial year.

  • Navigating supply chain issues with a mitigation plan and commitment to generating shareholder value.

  • Long-term capacity guidance to double in size by 2030.

  • GDP times two plus little bit is roughly an indication for how traffic will grow, and India has sort of consistently either reach these numbers or extended these numbers.

  1. Customer Growth and Trust:

  • 33 percent increase in customers flying in the September quarter compared to the same period last year.

  • 41 percent higher passenger numbers in the first half of the financial year compared to pre-Covid levels.

  • Aim to welcome 100 million passengers in the current year.

  1. Network Expansion:

  • Added four new domestic destinations and planning to start operations to more destinations.

  • Total domestic destinations to reach 86.

  • Focus on interstate connectivity and regional accessibility.

  1. International Strategy:

  • Strengthening international network with six new destinations across Central Asia, Southeast Asia, and Africa.

  • Plans to fly directly to 34 international destinations.

  • Increased share of available seat kilometers to 26 percent with a goal to reach 30 percent in the coming years.

  • Codeshare agreements with British Airways and potential expansion with Qantas.

  1. Service Enhancements:

  • Revamped in-flight menu based on customer, cabin crew, and service partner feedback.

  • Commitment to diversity, equity, and inclusion, with recognition and awards for inclusion of persons with disabilities.

  1. Sustainability Achievements:

  • Received the Environmental Sustainability Airline of the year award for the Asia region.

  • Continuous investments in new generation aircraft to reduce CO2 footprint.

  • Reduced CO2 footprint per available seat kilometer by around 20 percent in FY 2023 compared to seven years ago.

  1. Awards and Recognitions:

  • Won the 'DEI Power Award' for the inclusion of Persons with Disability at the Global Inclusion Summit 2023.

  • Received the Environmental Sustainability Airline of the year award at the CAPA Global Environmental Sustainability Awards 2023.

  1. Top of Form Cost Management:

  • Fuel CASK reduced by around 27 percent compared to September 2022, primarily due to a reduction in fuel prices.

  • Introduced a distance-based fuel charge on domestic and international flights in response to consecutive price hikes in ATF (Aviation Turbine Fuel).

  1. Capacity Growth and Mitigation Measures:

  • Reiterates financial year 2024 capacity growth guidance of north of mid-teens.

  • Confident in meeting long-term capacity guidance despite challenges.

  • Improved liquidity position with free cash of 180.8 billion rupees and total debt of 493.9 billion rupees.

  • Diversifying sources of financing, exploring different forms of leases, and considering aircraft purchases.