InterGlobe Aviation Limited (INDIGO) Q4 FY23 Earnings Concall Transcript

InterGlobe Aviation Limited (NSE:INDIGO) Q4 FY23 Earnings Concall dated May. 18, 2023.

Corporate Participants:

Richa Chhabra — Associate Director – Investor Relations

Pieter Elbers — Chief Executive Officer

Gaurav Negi — Chief Financial Officer

Analysts:

Binay Singh — Morgan Stanley — Analyst

Deepak Krishnan — Macquarie — Analyst

Mitul Shah — Reliance Securities — Analyst

Arvind Sharma — Citi — Analyst

Deepika Mundra — JPMorgan — Analyst

Achal Kumar — HSBC — Analyst

Krupashankar NJ — Avendus Spark Capital — Analyst

Venkatesh Balasubramaniam — Axis Capital — Analyst

Sabri Hazarika — Emkay Global — Analyst

Shaleen Chaudhary — Axis Capital — Analyst

Aditya Mongia — Kotak Securities Limited — Analyst

Presentation:

Operator

Good evening, ladies and gentlemen, and welcome to IndiGo’s Conference Call to discuss the fourth quarter and fiscal year 2023 financial results. My name is Nirav, and I’ll be your coordinator. [Operator Instructions] As a reminder, today’s conference call is being recorded. [Operator Instructions] I now hand the conference over to Ms. Richa Chhabra from Investor Relations team of IndiGo.

Thank you, and over to you, ma’am.

Richa Chhabra — Associate Director – Investor Relations

Good evening, everyone, and thank you for joining us for the fourth quarter and fiscal year 2023 earnings call. We have with us our Chief Executive Officer, Pieter Elbers; our Chief Financial Officer, Gaurav Negi; and Head of Investor Relations, Kailash Rana, with us to discuss the financial performance and are available for the Q&A session.

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. We will upload the transcript of prepared remarks by day end. The transcript’s Q&A session will be uploaded subsequently.

With this, let me hand over the call to Pieter Elbers.

Pieter Elbers — Chief Executive Officer

Thank you, Richa. Ladies and gentlemen, a very good evening, and thank you for joining the call. Today we announced our fourth quarter and fiscal year 2023 financial results. Financial year 2023 was a year of recovery and growth as demand remained robust, and we continue to serve the lion’s share of this demand. Our revenues for the financial year 2023 more than doubled as compared to last year. And we also reported the highest ever annual revenues of INR558.8 billion.

In terms of profitability, the year had two very distinct periods of two quarters each. The first two quarters were negatively impacted by the high fuel prices and the depreciation of the rupee due to which we reported a net loss of INR26.5 billion for the first six months period ended September ’22. Excluding the impact of foreign exchange, we were close to breakeven during that same period. However, starting the third quarter, the increase in demand, along with our strong operational performance and stabilization of external variables led us to report a meaningful profit after many quarters.

The net profit for the six-month period ended March 2023 was INR23.4 billion. Excluding the impact of foreign exchange, we reported a profit of INR26.8 billion during that same period. For the quarter ending March 2023, the fourth quarter, we reported revenue of around INR146 billion and a net profit of INR9.2 billion and a net profit margin of 6.5%. This net profit in the fourth quarter was the highest ever fourth quarter ever.

Further, to the full financial year 2023, if we exclude the impact of foreign exchange largely on account of mark-to-market losses, we reported a profit of INR26.5 billion for the financial year ’23 as compared to a loss of INR52.2 billion for the previous financial year. Gaurav will discuss other elements of our financial performance in more detail in his section.

During this third quarter of the financial year, we had set our organization’s long-term direction, and we have defined three strategic pillars of ReAssure, Develop and Create, this to support our growth plans as we are looking to double in size and scale by the end of this decade. In other words, something that took us around 16 years will now be achieved in less than half of that time frame.

A wide range of initiatives were set in motion under these three strategic pillars and an enormous amount of teamwork has been displayed by the employees across departments and locations, which has enabled us to improve on operational, financial and customer experience parameters.

Under the Reassurance pillar, we are reassuring and improving wherever needed on the very basics of our company, which are on-time performance, purchase and hassle-free service, affordable fares, and we have added to this an unparallel network. Some of our achievements under this pillar are: first, an increase in passengers served to a record of 86 million passengers last year, a 72% jump as compared to the financial year 2022. This is by far the highest number of passengers ever served by us. Two, an improvement in the on-time performance as from November ’22 onwards, as we’re back to become the most punctual airline in the country and for sure of the top airlines in the world. Launch of new destinations such as Ras Al-Khaimah, Itanagar, Mopa – Goa, Nashik and Dharamshala. Four, addition of connectivity through new routes, including Pune to Varanasi, Indore to Surat and Jaipur to Bhopal and the addition of frequencies from destinations like Mumbai, Kolkata, Bangalore, Hyderabad and Cochin. Lastly, the introduction of two wide bodies on damp lease, the second widebody commenced operations from Mumbai to Istanbul as recent as yesterday.

Under Develop pillar, we are developing and aligning people, processes and technology in line with the growing size and scale of our company. The initiatives we are taking under this pillar are enabling us to steer part towards the goal to serve around 100 million passengers in this year — full year ’24, a scale at which only a select group of airlines in the world have operated. Some of the outcomes under this pillar are: improvement in our aircraft utilization levels; introduction of electronic flight briefing that improves batch reliability and helps us in reductions of flight weight by some 40 kilos also adding to our sustainability goals; further digitization, including deployment of world-class cloud, the native platforms for our customers and employees to enhance the experience; and operational efficiencies and to support scalability. Lastly here, training of more than 1,850 employees per day at our state-of-the-art learning center, iFly, and improvement in our Employee Promoter Score.

Under the third pillar of Create, we are working to create the next phase of our growth, combining our very strong Indian Foundation with our international aspirations. Some of the steps taken under this pillar are: expansion of our international footprint as we now do serve an impressive 33 European destinations through our codeshare partner, Turkish Airlines, the recent additions being Edinburgh and Sofia. Secondly, commencement of the foundational work for our customer loyalty program that will enable further customer loyalty. We have further supplemented the business with two freighters, and the third one expected sometime in the third quarter of this financial year.

Apart from all this, recently, our Indigo employees responded to the critical humanitarian need as we repatriated hundreds of Indian citizens from Sudan under the government’s program, Operation Kaveri. And we have also operated multiple special flights from Imphal to various parts of the country, and I would like to here again express my sincere gratitude to all IndiGo employees for their participation in such causes.

Now on the growth side. While Indian aviation has grown at an impressive passenger compounded average growth of around 13% in the seven years pre-COVID, we are still a highly underpenetrated country currently in terms of both domestic and international air travel. In order to bridge this gap, our airline has expanded its presence already to 78 destinations in India and 26 destinations outside India. We will continue to develop on the domestic network and reassure an unparalleled connectivity with a goal to serve every city. This is part of our purpose, giving wings to the nation by connecting people and aspirations, something that we have lived since — that we have lived by since our inception and which we continue to go forward, well summarized also as India by Indigo.

Another important part of our future is the internationalization which falls under the Create pillar. We fly at a diverse set of destinations, Srinagar in the North, Cochin in the South, Jaipur in the West and Silchar in the East. The sheer size of India and the demographics in combination with the unparalleled network of Indigo allows us to have a very rich international scope. Towards this goal, we had recently become the first Indian carrier to commence international operations from Bhubaneswar, being at the forefront of further enhancing international connectivity from not only the metro cities, but also from non-metro cities at very affordable fares.

Keeping in mind our customers’ preference, we’re adding more routes and more frequencies. For instance, we will soon connect both Delhi and Bhubaneswar also to Singapore. With these added brands, we’ll be flying to Singapore from seven Indian destinations with 44 weekly flights. Going forward, we’ll further strengthen our presence in Central and Southeast Asia and the Middle East by adding more routes and destinations.

Our network expansion plans are being well supported by our pending order book of around 500 planes and government policies and initiatives. We’re operating in one of the most exciting and vibrant aviation markets in the world, and within that, we’re structurally one of the strongest players. With an average fleet age of only three-and-half years, we’re proud to also operate one of the youngest and most fuel-efficient fleet. Our early on investments in new technology has enabled us to become one of the lowest CO2 emitting airlines in the world.

And before I end, I will give you some directions towards the current quarter. The demand remains robust with healthy yields and forward bookings are very encouraging. The actions we have taken in the last few quarters have put us in a position of strength and will allow us to take full advantage of the opportunity. We are looking forward to the next fiscal year with great enthusiasm as we aspire to grow north of mid-teens, building on our ambitious expansion plan towards our purpose of giving wings to the nation by connecting people and aspirations.

Thank you for your attention, and let me now hand over the call to Gaurav to discuss the financial performance in more detail.

Gaurav Negi — Chief Financial Officer

Thank you, Pieter. Good evening, everyone. For the quarter ended March 2023, we reported a net profit of INR9.2 billion, with a margin of 6.5% compared to a net profit of INR14.2 billion for the quarter ended December 2022 and a net loss of INR16.8 billion for the quarter ended March 2022. We reported an EBITDAR of INR29.7 billion with an EBITDAR margin of around 21%. For the year ended March 2023, we reported a net profit of INR3.1 billion compared to a net loss of INR61.6 billion for the year ended March 2022. Excluding the foreign exchange impact, we reported a profit of INR26.5 billion compared to a loss of INR52.2 billion for the year ended March 2022. Further to what Pieter shared, we reported an EBITDAR of INR73.1 billion for the year ended March 2023 compared to an EBITDAR of INR11.5 billion for the year ended March 2022, an increase of more than 500% against a capacity increase of 62.5%. This improvement is primarily attributable to increase in revenues due to higher load factors and yield and better absorption of fixed costs due to added scale of operations.

For the quarter ended March 2023, unit revenue came in at INR4.68, which is about 18% higher on a year-over-year basis and 11% lower compared to a seasonally stronger December quarter. Total revenue increased by around 78% on a year-over-year basis and dipped marginally by around 5% on a sequential basis.

On the cost side, the fuel CASK reduced by 8.3%, primarily due to reduction in average fuel price by close to 7% as compared to the December quarter. Looking at nonfuel cost, the rupee closed stronger at the quarter end, leading to a forex gain of INR2.5 billion. Looking at the cost ex-fuel ex-forex, there’s a sequential increase by around 2%, mainly due to increase in our maintenance costs. All other cost line items are broadly remained range bound.

As you are aware, over the past couple of quarters, the aviation industry has been facing global supply chain disruption leading to shortages of spare engines. Due to this issue, some of our aircraft remained grounded during the quarter. On the other hand, the demand for air travel remained robust, warranting us to deploy adequate capacity, though — through alternate groups as well as sources, including wet leasing and lease extensions to enable us to remain on track with our growth plans. Such lease extensions added economic value to our business and is accretive to the bottom line, but will have an adverse impact on our maintenance cost.

Despite these ongoing supply chain disruptions, we demonstrated high level of agility with positive market developments that led to a capacity growth of around 19% in the financial year 2023 as compared to financial year 2020. This is higher than our previous guidance of 13% to 17% that we had provided at the beginning of the year. Our liquidity continues to remain strong as we ended the quarter — March quarter with a free cash of INR121.9 billion, a net increase of INR15.8 billion as compared to the December quarter.

Our total cash as on 31 March 2023 was INR234.2 billion. We ended the year with a capitalized operating lease liability of INR415.5 billion and a total debt, including the capitalized operating lease liability of INR448.5 billion. Our right-to-use assets at the quarter end were INR265.4 billion. Our pending order book of around 500 aircraft structural cost advantages and long-term relationships we have with our supply chain partners, are our key assets as they place us in a very strong position to reap the benefits of robust demand in the market.

We are expecting to add high mid-teens growth in Q1 of fiscal year 2024 as compared to Q1 of fiscal year 2023, which translates to around 5% to 7% growth as compared to Q4 of fiscal year 2023. We will broadly grow at north of mid-teens in the financial year 2024 as compared to financial year 2023. We had the privilege of serving around 86 million customers in fiscal year 2023, and we expect to serve around 100 million customers in fiscal year 2024. To support this growth, we are investing multiple crores in series of digital initiatives, and we are also hiring around 5,000 employees.

Having been through a period of robust growth since our inception, our future is full of attractive opportunities as we look forward to doubling our size and scale by the end of the decade. We are taking all right measures today to support these growth plans, and we continue to remain focused on providing high-quality service to our customers, increasing our efficiency levels and remain committed to generate healthy returns on capital for our shareholders.

With this, let me hand it back to Richa.

Richa Chhabra — Associate Director – Investor Relations

Thank you, Pieter and Gaurav. [Operator Instructions] And with that, we are ready for the Q&A.

Questions and Answers:

Operator

Thank you very much. [Operator Instructions] The first question is from the line of Binay Singh from Morgan Stanley. Please go ahead.

Binay Singh — Morgan Stanley — Analyst

Hi, team. Thanks for the opportunity. Just two questions. One is on international and second is on the operating income. So I’ll start with the international side. Could you comment anything about profitability per fleet in international versus domestic? I’m asking this as we are seeing scale up in international, and for the first time we’re seeing…

Gaurav Negi — Chief Financial Officer

Binay, sorry to interrupt you, but your voice is not coming very clear.

Binay Singh — Morgan Stanley — Analyst

So I’ll give out my questions, and if it’s not audible then I’ll dial in again. So the first question is on the international side. Just wanted your comments on profitability per fleet on international versus domestic. Asking in context of the fact that we are using the Boeing fleet, a first time for us, whereas in the past, we’ve generally been in the Airbus fleet. The second is, we continue to see very high other operating income. I assume it’s coming from the PAT and PBT compensation. Could you comment a little bit about what percentage of fleet is grounded? And is it fair to assume that the rise in other operating income is actually being offset by higher costs also that the company is bearing, given the fact that the fleet is grounded? So those are two questions. Thanks.

Pieter Elbers — Chief Executive Officer

Thank you for your questions. Let me try to answer your first one and then Gaurav will address your second question. So on your first one on the international versus the domestic profitability, it’s — I would say, it’s a rather generic because not every international route is the same, neither is every domestic route the same. But if we take it on from a very generic approach, in general, international operations have a somewhat lower cost per unit given the stage length, which is somewhat longer. And also the average levels international flights are somewhat better. So a very generic statement would be, in general, the international operation is doing somewhat better than the domestic operation. Again, going into more details, you’ll find very good domestic routes and lesser international routes and the other way around. But generically, it’s slightly better.

Gaurav Negi — Chief Financial Officer

Then Binay, on your second question related to other income, I’ll not answer just on other income, but overall on the revenue basis, on the revenue, we do have income coming from finance income in terms of investments that we’ve done, also VGF fundings that we have for our regional routes. And it also does include certain compensation we get from various OEMs. So to answer your question, we do get compensation from various OEMs, which is part of our revenue classification, but it also has finance income and various RGF related viability gap funding that we receive.

Binay Singh — Morgan Stanley — Analyst

Thanks, team. I’ll come back in the queue.

Operator

Thank you. Next question is from the line of Deepak Krishnan from Macquarie. Please go ahead.

Deepak Krishnan — Macquarie — Analyst

Thanks for the opportunity. I just wanted to check with the competitive environment changing. Are we doing anything to sort of accelerate fleet addition because our guidance is still north of mid-teens for the year? But anything that we can do to accelerate deployment and sort of gain incremental share? And what is our viewpoint both for the domestic market and the international market on this?

Pieter Elbers — Chief Executive Officer

I think what we have demonstrated over the past couple of quarters is to be very consistent in our outlook and very consistent in our predictions. And despite the fact that we have been confronted also with supply chain challenges, as Gaurav alluded to on in his speech, we actually have been able in the past quarter and for the full year ’23 in order — we have been able to operate at somewhat higher levels than predicted. Our level now which we have forecasted for the full year ’24 is actually the very same high mid-teens number as we shared last time with you. So we continue to deal with the supply chain issue. We continue to work on mitigating measures like we did earlier on extension of leases. And with that, we are confident that we can deliver the capacity guidance, which we have shared with you earlier.

Deepak Krishnan — Macquarie — Analyst

And maybe just one follow-up on maintenance CASK. We’ve indicated that part of that is you do supply chain extension. But do we look at this quarter’s number of INR0.77 supplemental maintenance rate as a percentage of ASK, or do we go back to the INR0.7 — the INR0.66 level that we have? Or is it like this issue would continue till we are — sort of have fleet grounded. How do we look at that?

Pieter Elbers — Chief Executive Officer

I’m not sure I would understand your questions. Could you…

Deepak Krishnan — Macquarie — Analyst

The supplementary and maintenance cost for ASK is higher this quarter at INR0.77. This is largely a function of obviously indicated lease extensions. So does this continue at these levels? So would we continue to have elevated maintenance expense? Or would it normally go back to the INR0.7 level that we generally have?

Gaurav Negi — Chief Financial Officer

It’s going to be range bound between the INR0.7 and the current unit cost that you see because there are elements of, again, escalations, inflation and FX that will come into play. So you can consider this to be range bound between what we had earlier to where we are today from a unit cost standpoint.

Deepak Krishnan — Macquarie — Analyst

Sure. Thanks, Gaurav. Those are my questions. I’ll get back in the queue.

Operator

Thank you. Next question is from the line of Mitul Shah from Reliance Securities. Please go ahead.

Mitul Shah — Reliance Securities — Analyst

Thank you for the opportunity, sir. First question is on one of the competitors’ recently upcoming entire operation stand still because of — the key reason coming out is that engine supply from VW. So what is our status on that side? How we are placed in terms of situation of the engine supply over Q3, Q4 and current? How — what strategy we are following differently that we are relatively in a much better position?

Pieter Elbers — Chief Executive Officer

Our number when it comes to planes not operational due to supply chain challenges, it’s actually a very stable number. It’s relatively changing — stable, it changes on a daily basis, but the overall number itself is around the high service. Again, with that, we have taken a lot of measures — a lot of mitigating measures to deal with that situation. And we should look at the overall and the entire fleet of Indigo and that combination of the overall fleet size. Today we have a little over 300 planes for Indigo and the overall fleet sizes should be taken into consideration in combination with the mitigating measures we’re having.

Mitul Shah — Reliance Securities — Analyst

Sir, directionally situation is improving or more or less stable, we can say, or it is improving Q-on-Q?

Pieter Elbers — Chief Executive Officer

Directionally, I would say it’s stable.

Mitul Shah — Reliance Securities — Analyst

And sir, in terms of directionally number of aircraft grounded, is that similar to what it was in Q3 or it has improved in Q4?

Pieter Elbers — Chief Executive Officer

I would say it’s directionally stable.

Gaurav Negi — Chief Financial Officer

It continues to be stable between Q3 and Q4. It’s still stable for us, and we are actively engaged with our OEM partners to make sure we are able to resolve it, but you can consider this to be stable for the time being.

Mitul Shah — Reliance Securities — Analyst

Sir, second question on yield. Q-on-Q drop is 11%, seems to be slightly higher considering that our load factor has marginally dropped, even ASKs are quite high. So an overall traffic situation is relatively much stronger compared to past Q4 seasonality. So is it like we need to pass on the maximum benefit of lower fuel prices or anything else beyond seasonality?

Gaurav Negi — Chief Financial Officer

No, it was largely seasonality. And again, we were coming off a very strong Q4. So that’s why you see the dip that happened in — from Q3 to Q4. Looked a little more elevated in terms of the decline, but it’s all largely driven by seasonality for us.

Operator

Thank you. I request all the participants please restrict to 2 questions per participant. Next question is from the line of Arvind Sharma from Citi. Please go ahead.

Arvind Sharma — Citi — Analyst

Hello. Hi, thanks for taking my question. First question would be on the yield trends in the current quarter, i.e., 1Q FY ’24. Especially in the backup of lower fuel costs, would the yield still continue to be as strong on a Y-o-Y basis? So comments on that? And my second question would be more details on the damp lease aircraft. Do you see more of these coming in, in the fleet and the impact on profitability? And just an addon to this question, with the current competitive landscape or the broader industry landscape, do you think there could be opportunities for you leasing out aircraft which are already in India, but not in use?

Gaurav Negi — Chief Financial Officer

So the first one in terms of the yields, given the capacity constraints that is there in the market, we are seeing some better yields on a Y-o-Y basis. So that’s working out favorable on the yield side. The load factors are also coming in strong, given the constraint on the capacity, which is there for obvious reasons. So that’s what we are experiencing at least from a Q1 standpoint. And if you just come up with the second question you had?

Pieter Elbers — Chief Executive Officer

On the damp lease — the second question was on the damp lease. The damp lease operation, of course, it was born out of a combination of several factors. One was the mitigating measure for the supply chain issues and the other one was the partnership we were already having with the Turkish Airlines. It’s probably a bit too early to come to a final evaluation from a financial perspective. What I can say is we’re operating now for three months the 777 damp lease between Istanbul and Delhi.

We’ve commenced yesterday actually the flight from Mumbai to Istanbul. We see a very healthy development of loads, and we see also a very healthy development of connectivity. As I mentioned in my elucidation, we do have 33 beyond codeshare destinations which are giving Indigo a lot of exposure in the European markets where basically until recently Indigo was not present. So I would say very positive development, healthy loads. A bit too early to come to conclusions on the bottom line effects of that.

Arvind Sharma — Citi — Analyst

And if you could just share your views on the possibility of aircraft within India, given that we could have some aircraft which would not be used?

Pieter Elbers — Chief Executive Officer

We’re not speculating on any sort of availability of aircraft and what will happen with aircraft. Again, I think we have initiated a lot of actions last year — at the end of last year for lease extensions. We do have a order book of close to 500 aircraft, which means we have a steady flow of aircraft coming in. And for the rest, I think it’s a bit premature to make statements on other possible aircraft coming available.

Arvind Sharma — Citi — Analyst

Sure. Thank you so much for answering my questions. That’s all from my side.

Operator

Thank you. Next question is from the line of Deepika Mundra from JPMorgan. Please go ahead.

Deepika Mundra — JPMorgan — Analyst

Hi. Thanks for taking my question. So just on the lease cost hardening that we’ve seen globally, how much do you think is already flowing through Indigo’s P&L? And how much do you expect lease — yield to harden from here given both inflation and higher rates?

Gaurav Negi — Chief Financial Officer

Not significant for Indigo because large part of our leases were fixed rate leases. So a substantial chunk, more than 95% is [Technical Issues]. So there is no impact on Indigo related to the reference that you’re making in terms of hardening both because of interest rates going up. As far as looking forward, again, we do not expect a substantial change in the lease rentals that we have given the relationships that we’ve enjoyed, strong relationship with underserved communities. So as a result, we do not foresee a severe headwind related to lease costs going up for us. There will be a marginal increase given the interest rates, that have increased, but it’s not going to be a very substantial effect to India. That’s at least our read for the time.

Deepika Mundra — JPMorgan — Analyst

So just to clarify, this is on new deliveries also that the economics haven’t changed too significantly, other than, of course, FX?

Gaurav Negi — Chief Financial Officer

No, the new ones will be again closed out with the latest rates. But a large part of the credit that comes to us in terms of the financing that happens through the lessor community is also based on the credits that we carry in the international market. So the lessors have looked at IndiGo more favorably, given what we’ve experienced with us in the last three years, especially during the pandemic. And given our strength of the balance sheet that now we have, given the cash that we carry, we are always able to negotiate a better rate than what would be available or what you would be hearing from the rest of the community.

Deepika Mundra — JPMorgan — Analyst

And if I can just follow-up on the 15% plus growth targeted for next year, how much is that likely to come from damp leases or other extension-related measures rather than new deliveries?

Gaurav Negi — Chief Financial Officer

The large part of the measures that we took for lease extension as well as the damp lease that we’ve taken is to compensate for the grounding that we are facing. So equivalent to that, you can consider as a percentage will be coming from these extensions and the damp lease.

Deepika Mundra — JPMorgan — Analyst

Understood. Thank you so much.

Operator

Thank you. Next question is from the line of Achal Kumar from HSBC. Please go ahead.

Achal Kumar — HSBC — Analyst

Hi. Thank you for taking my questions. So first of all, on the international side, I would appreciate if you could please give us a bit more color on your strategy towards international? I mean, you mentioned that you’re starting flights from Delhi and Bhubaneswar to Singapore. But I remember you started flight from Delhi to Singapore and then that did not work because you were competing with — against Singapore and Air India. So you closed down that flight and started Delhi-Chennai-Singapore, which was actually Chennai-Singapore, not Delhi-Singapore. So now — So basically, that was an example, but how you — how are you planning to strategize your international operations? I mean, to be fair, if I’m flying to international destinations on A321 versus 787, of course, better ride on 787. So are you competing on the fares? Are you competing on — I mean, what is your ground? How — what is your strategy on the international side? So that is my first question.

And then secondly, on the liquidity, I mean, your cash is compiling — your cash is piling up and now you’ve got a free cash of INR122 billion. What are you thinking? I mean, do you have any plans to use this cash? I mean, of course, globally, I understand that most of the airlines including Ryanair, they plan 20% of their revenues as — I mean they prefer to maintain liquidity. But I mean, in your case, it’s already 22% and then the business environment is so strong. Do you have any plans to use this cash?

Pieter Elbers — Chief Executive Officer

Let us divide again. Question two will be dealt with by our CFO, Gaurav, and I will deal with your first question. When it comes to the international situation — and thanks for bringing that up. The situation, of course, with Delhi-Singapore, I think we suspended that operation prior to COVID. And that, I would say, was still a different setting and a different dynamic.

To your question how are we going to compete and how are we going to win the customers, actually, it’s the very same as we do on the domestic network, our customer promise, on-time performance, purchase and hassle-free service and affordable fares. And especially the latter one with a lot of pressure on international fares, we see that a lot of customers are choosing for us. And back to the earlier question on even profitability and customer preference. We see a strong performance on the international network precisely for us staying very truthful to the very core of our customer promise. What has changed, of course, is the recovery of the market post COVID. But also, I would say, at Indigo itself, we have now built up a lot more connections.

If you just look to Delhi, and perfectly aligned with the ambition of the Indian government to develop also India more into a global aviation hub, we see that we do have a lot of new connectivity. So if you have to transfer from Dharamshala to Singapore, for example, you have a perfect way to fly with Indigo from Dharamshala to Delhi, connect with us and fly onward to Singapore.

Second part, I guess, is that we have strengthened our overall position. The fact that we do now have seven destinations in India connecting to Singapore directly is really helping us to make sure that not only customers from India, but also customers from Singapore — basically, our philosophy there is, wherever you have to go in India, you have to go Indigo. That’s precisely our philosophy, India by Indigo.

Third point on the international network, and sorry to drag on a little bit on that part, but I think it’s an important part of our strategy, is to further build up that network. So the examples I’ve given, we’re focused on Singapore. But indeed, as you rightfully should point out, we have mentioned more international expansion. In the previous call, we have mentioned Nairobi and Jakarta as destinations.

We start opening in due course of this summer. Of course, we are now working subject to all regulatory approvals and all preparations for international flights. That require a bit more preparation time than opening domestic flights, but we’re very much committed to make sure that Nairobi and Jakarta will be added, and we’re also looking towards Central Asia for further network expansion. So actually, there’s a combination of factors.

And to summarize my reply, we focus on what has made Indigo strong domestic to do the same international. We work with partners and we develop our network. That network is connecting over quite a few places, and we are creating a customer proposition with some good connections, but also some unique connections like Bhubaneswar, Dubai and through Bhubaneswar, Singapore as well. And lastly, we’ll continue to expand our international network with the destinations which I mentioned.

Gaurav Negi — Chief Financial Officer

As far as the second question goes in terms of the free cash, like you gave a reference point to one of the airlines, 20% of the revenue. I think today, we are reasonably placed having that amount of cash available to us. But as far as where to deploy this cash, a large part of that cash is going to be deployed towards the growth initiatives that Pieter also talked about in his categorization of Develop and Create. We’ve got a lot of investments going to support that growth in the digital space. We are looking at expanding some of our infrastructure.

Even for us to expand internationally or to start of areas of loyalty programs as well as the freighter business requires our investments. Those are the areas we’ll be prioritizing. But we are well placed today in terms of the size and scale of the business that we’ve become, close to INR56,000 crores, that we do need to carry this level of cash — free cash that we have or any kind of contingency whether — if they so arrive. So — but we’ll continue to keep investing for the growth that has been talked about. So are looking to double ourselves in the next seven years, and that’s where the cash is going to be prioritized towards.

Achal Kumar — HSBC — Analyst

Thank you.

Operator

Thank you. Next question is from the line of Krupashankar NJ from Avendus Spark. Please go ahead.

Krupashankar NJ — Avendus Spark Capital — Analyst

Good evening and thank you for the opportunity. My first question is on the additional slots which will be potentially available in specific airports because of the substantial scale down of operations by our competitor. Does that — will Indigo aggressively bid for additional shares in the domestic airport? And how would — what is the time line in which we can expect that these will be allotted to the industry participants? And my second question was on the corporate travel. Perhaps if you can throw some light on how that has shaped up in the quarter gone by and how is it at present?

Pieter Elbers — Chief Executive Officer

When it comes to the slots, I think it’s again here, too early to comment. There’s still a lot of unclarity and uncertainty. What we do at Indigo is we try to make sure that Indian consumers who want to fly domestic, we have capacity for them. So it’s a bit too early to jump into what’s going to happen on other parts, as I mentioned with the earlier question. But again, we try to optimize our network and make sure that we offer the capacity whereas demand from the customers. When it comes to the corporate market, there’s, of course, a situation where we see that the Indian economy is doing well. And with the Indian economy and the domestic economy doing well, we also see a demand.

Having said that, it is very difficult to precisely segregate between the two sets of travelers. But based on the product offerings we’re having — and we can see some historic trends. But the strict definition of corporates, business versus leisure or people working from different locations is not exactly too good.

Overall, I think we see a healthy development of that business part, and we see especially on the ticker routes and on some of the strong routes, a development of more traffic geared towards corporate travel.

Krupashankar NJ — Avendus Spark Capital — Analyst

Thanks, but let me rephrase my question in a different fashion. How has been — what we are seeing here is, of course, the less than 15-day travel window seeing a sharper increase in ED [Phonetic] vis-a-vis the greater than 15-day booking window. So just wanted to check how is the demand for both segments? If — that is something which we used to give out pre-COVID. So just wanted to check how is the demand being in that scenario?

Pieter Elbers — Chief Executive Officer

I think it’s — they’re having the benefit of having worked for 30 years in different international markets. I think the Indian market is a market which is very late booking and which has a very high percentage of bookings in that, let me say, 15, but even 30 days prior to the departure. It’s also something like, it seems the customer behavior has changed somewhat, not only for the business part, but even for the leisure or the nonbusiness part. So it’s probably not possible to differentiate and say whatever books between zero and 15 days for departures, largely business and whatever, has a longer time frame is non-business. I don’t think we can say it like that.

It was already probably different prior to COVID. Post-COVID for sure, that’s not the case anymore. And maybe just to add to that question, that’s why the agility we have demonstrated at Indigo is so important. Whenever we have opportunities, we adjust our network and we focus on the market. And then actually, we do see even at the very last moment, a lot of bookings coming in. So against that background, it sort of proves our point that the market has changed more fundamentally, I would say.

Operator

Thank you. Krupashankar, I’ll request you to join the queue for the follow-up question. Next question is from the line of Venkatesh Balasubramaniam from Axis Capital. Please go ahead.

Venkatesh Balasubramaniam — Axis Capital — Analyst

Yes. Can you please share what was the number of employees you had at the end of FY ’23? I believe this number was 26,160 crores at the end of FY ’22. So can you please share the number at the end of FY ’23? And on a related note, I think this year, your per ASK employee cost was around INR0.4. At the beginning of the year, the scenario was very different. I guess, Akasa was ramping up and Jet Airways was supposed to start. But now we are ending the year very differently with one airline in trouble and Jet Airways never started. So there was a general expectation that this will actually — there will be some wage increases. But do you still expect that to happen or this remains at this INR0.4 level going forward? That is my first question.

Gaurav Negi — Chief Financial Officer

Related to the first part in terms of the number of employees, we closed the year closer to a 32,000 employee base for Indigo. As far as employee salary cost as a percentage of ASK, it’s going to remain at these levels, but subject to the increments that are part and parcel of every organization’s costs, which will kick in from the fiscal year 2024.

Venkatesh Balasubramaniam — Axis Capital — Analyst

Okay. The second question is on aircraft additions. Could you share what was the gross addition in this year? And how many CEO claims you returned in the current year? And also, how much do you expect to add on a gross basis? And how many planes do you expect to return next year?

Gaurav Negi — Chief Financial Officer

On a net basis, we will — we are looking to add close to 40 to 50 planes in fiscal year 2024. As far as the other question in terms of what happened in the 2023, there was a net addition of around 29 to 30 aircrafts that we had. Final details you can contact the IR team and they’ll be able to provide you.

Venkatesh Balasubramaniam — Axis Capital — Analyst

Thanks a lot.

Operator

Thank you. Next question is from the line of Sabri Hazarika from Emkay Global. Please go ahead.

Sabri Hazarika — Emkay Global — Analyst

Yes. Good evening and thanks for taking my question. So if we look into this current engine issues, so it is — is it — I mean, is it on a case-to-case basis or is it like more blanket in nature? I mean, considering there has been reports that almost like half of your fleet is still on P&W engines. So do you see that there is always some risk of these also going bad or something of that sort? Or do you think that things should remain steady here on? Or are you looking to like completely replace those engines down the line?

Pieter Elbers — Chief Executive Officer

Well, the aircraft which are coming in as from now are aircraft with the LEAP engines. So we’re still having the basis of the Pratt engines. We have LEAP engines coming in, and we’ll see that mixture will change a little bit over time. But again, we work closely with the OEMs to make sure that we have an adequate support and cooperation on that part and we are watching the situation closely going forward.

Sabri Hazarika — Emkay Global — Analyst

So your current fleet, you don’t see any worry? There’s part of the fleet which is still running on Pratt & Whitney, right?

Pieter Elbers — Chief Executive Officer

Sure. We have a part of the fleet running on Pratt & Whitney. The new aircraft coming in are coming in with LEAP, so that automatically changes the ratio going forward. And again, we work closely also with Pratt to make sure that the supply chain issues are being addressed.

Sabri Hazarika — Emkay Global — Analyst

Thank you so much and all the best.

Pieter Elbers — Chief Executive Officer

Thank you.

Operator

Thank you. Next question is from the line of Shaleen Chaudhary [Phonetic] from Axis Capital. Please go ahead.

Shaleen Chaudhary — Axis Capital — Analyst

Yes. Thank you for the opportunity. My first question was on the load factor. The load factor was at 82.1% in FY ’23? And how do we expect it to move in the next three years or so?

Gaurav Negi — Chief Financial Officer

Our endeavor is going to be to keep pushing it up, but it’s — we do not want to give any kind of forward guidance today for the next three years. But the effort is to keep pushing this upwards by utilizing the aircrafts better as well as obviously attracting more customer towards Indigo. But we can’t give you a outlook for the next few years.

Shaleen Chaudhary — Axis Capital — Analyst

And another one, if I may, how many planes do you intend to add in FY ’25 and to any stage? I understand you gave the number for FY ’24. Any color for the other two years?

Pieter Elbers — Chief Executive Officer

The short answer to that would be no. And the somewhat longer answer to that would be, we have, as we said earlier, an order book of 500 aircraft. These will be coming in towards the end of the decade. And we see all the supply chain issues. We work closely to make sure that we have a steady flow of aircraft coming in. This backlog of aircraft or this outstanding order of aircraft will enable us to double towards the end of the decade. And again, we coordinate closely to have that slower aircraft coming in. Our focus now is to make sure that we deliver in ’24 our network and our promises to the customers. And thereafter, it will be ’25 and ’26.

Shaleen Chaudhary — Axis Capital — Analyst

Okay. Thank you.

Operator

Next question is from the line of Aditya Mongia from Kotak Securities Limited. Please go ahead.

Aditya Mongia — Kotak Securities Limited — Analyst

Thanks for the opportunity. Both of my questions were on the international side of things. The first one was your good network of 33 destinations in Europe that you’ve been able to form now. My question was, is it yielding enough volumes for you through the codeshare at this point in time? Or is this more, let’s say, a case of distribution being enhanced, and once A321 happen, you want to just accelerate the benefits that are coming from Europe to Indigo?

Pieter Elbers — Chief Executive Officer

Well, again, I think for us, this is a new territory. We’re having today seven codeshare partners. All these codeshare partners were having their codes on IndiGo’s domestic network. So these seven codeshare partners, Turkish Airlines, Qatar, American Airlines, Air France, KLM and Qantas and Virgin Atlantic, were having their called on IndiGo’s domestic network. We were not having any codes on other airlines outside India or outside their hub, actually. It’s a very important step for us. Again, it’s giving us some market presence. It’s giving us a lot of visibility in these markets. In fact, it helps us to indeed prepare for the future. So it really serves multiple purposes.

And as I mentioned to one of the earlier questions, actually, the first results and first impressions are very encouraging. And we see there’s a lot of international demand, and people are looking for affordable fares and are actually looking for an alternative to some of the higher-priced fares. And there, I think the network of Indigo comes in, and we are in a great position to serve these markets.

Aditya Mongia — Kotak Securities Limited — Analyst

And the second question that I had was the recent news flow of Air France, KLM showing interest to use India as a stop over for journey from Europe to Sri Lanka. Now in this broad domain of I2I, do you see interest from your side to kind of go for these kinds of revenue? Or does it kind of drag down or slow down the network and you’re better off focusing on the Indian volumes only?

Pieter Elbers — Chief Executive Officer

Yes, I’ve read the article as well. I think what’s important, again, we’re having these codeshare corporations on our domestic network in India. We are now expanding international. I think it’s important for us that we build up some prudence with [Phonetic] partnerships. And as time will progress we’ll evaluate some of these possible new opportunities. And again, the further international network and the fact that we’re having some connectivity ourselves even on the international to domestic and even some international. International may provide new opportunities going forward. Think it’s a bit too premature today to comment whether that will take place or that will not take place. There’s still some homework to be done on that.

Aditya Mongia — Kotak Securities Limited — Analyst

Those are my questions and all the very best for your international endeavors. Thank you.

Pieter Elbers — Chief Executive Officer

Thank you so much.

Operator

Thank you. Next question is from the line of Deepak Krishnan from Macquarie Group. Please go ahead.

Deepak Krishnan — Macquarie — Analyst

Thanks for the follow-up. I just wanted to understand on the yield front. I think Gaurav indicated that yield is at a positive territory on a Y-o-Y basis. In terms of, say, organically, how do you look at the market? Is supplies disrupted maybe in terms of your outlook in forward bookings? How many quarters do you kind of see that it would take for supply to come back? Is the disruption continues? Maybe just an outlook on yields far ahead as well?

Pieter Elbers — Chief Executive Officer

Well, I think globally, we see a very strong recovery of the aviation. I mean, if we take a step back, I guess, at COVID, there were some prediction that aviation would be down for the years to come. Clearly, domestic markets have recovered rapidly, and the domestic market in India is no exception to that. And I guess, for the last couple of months, we see new records of Indians flying the Indian skies. So we see that recovery continuing. Again, hand-in-hand with the economic growth and the economic development of India itself. We see that further growing. On the international side, the recovery has been somewhat slower and somewhat later. Clearly, parts of Asia, surely China, but even Southeast Asia took a bit longer, but the fact that we are now back in such a strong manner, for example, in Singapore, just demonstrate that the international markets are also quickly coming back.

Again, going forward, there’s a lot of variables and elements coming into play for the international development. But if you take some of the industry reports — industry connections — projections, obviously, India is seen as a place where both domestic and international for the years to come it’s going to be a very vibrant market. And as I mentioned in my introduction words, looking at the percentage of Indian consumers flying, it’s still very low. If we look at the percentage of Indians flying international, it’s even lower. So all that opportunity going forward is really very significant when it comes to market development.

Operator

The line for the participant dropped. Next question is from the line of Achal Kumar from HSBC. Please go ahead.

Achal Kumar — HSBC — Analyst

Yes. Hi. Thanks for the opportunity again, which is there. So one — two things actually I want to understand. So at the moment, if we look at the international traffic going out of India and coming back to India, so it looks like the travel — the Indians traveling outside India, going on international trip, seems to be very strong. So how that plays out in terms of profitability? I mean, do you think you’re carrying the similar load factor going — while going and coming back? Or do you think while coming back, there is a challenge and the profitability is low or the load factor is low? So that is my first question. Secondly, a simple plane question. How many planes are grounded at the moment? And what is the status? I mean, are you hearing back in terms of how many engines are you going to get? And when do you think these plans could revive or could fly back?

Pieter Elbers — Chief Executive Officer

Well, you had a very “plane” question, let me give a very plane answer, which is a repetition of what I said earlier. The number of planes is in the high 30s. That’s the number of planes we said earlier, and that’s the plane answer to your “plane” question. I’m not sure if I understood fully your first question when you said about coming back. Do you mean the directionality of traffic or what exactly do you mean?

Achal Kumar — HSBC — Analyst

Yes, exactly. I mean — so when you see the directionality in terms of international demand, it looks like there is a very strong demand for the Indians going out on the international trip. But while on the way around, I think the demand is not as strong. And — so that’s my question. I mean how does it play out for you guys?

Pieter Elbers — Chief Executive Officer

No, I would say there’s a strong demand, both to and from India coming back. Of course, there’s a huge Indian diaspora as well which is flying back and forth. So yes, there are some different dynamics and different seasonalities and kids studying abroad and coming back and business patterns. So they’re not all the same patterns. But in general, I would say, the demand both to and from India is recovering in a similar fashion and developing in a similar fashion. And look at the new foreign investments in India being done, that is all driving inbound traffic. Look at the number of Indian students going abroad, that’s outbound traffic. So again, both dynamics are really growing and expected to continue to grow in a similar fashion.

Achal Kumar — HSBC — Analyst

Sorry, Pieter, I was actually referring to the data which — the data suggests that while the traffic going out of India is very strong, while coming back the numbers didn’t say so. That’s why this question was — but anyway, I think you fairly mentioned.

Pieter Elbers — Chief Executive Officer

Yes. No, I don’t know which data you’re referring to. But again, we should make a difference between loads on flights where there’s a certain seasonality and what is the point of sale, and I was referring mostly to the point of sale and point-of-sale India versus point-of-sale outside EMEA. And then yes, we see some times of the year when the flights out are fuller than the flights in, but that’s not necessarily the same as the point of sale, but maybe that becomes a rather technical elucidation.

Operator

Thank you very much. Ladies and gentlemen, we’ll take that as the last question. I now hand the conference over to Mr. Pieter for closing comments.

Pieter Elbers — Chief Executive Officer

Yes. Thank you so much. Thanks, everyone, for joining this press conference and all the questions and the great questions you’ve addressed to us. Maybe in a closing remark, let me refer back to what we have mentioned in the press release. I think very important for us is that with the combination of a robust market demand and a very focused execution of our strategy, this was the second consecutive quarter where we produced a very strong operational financial results as we reported our highest ever fourth quarter net profit of INR9.192 million. I think that’s actually the key message. A very strong performance, a very solid profit and the highest ever Q4 profit which we have done. And that was driven by the combination of strong markets and an execution of our strategy. So I would like to close with — on that note and wish you all a wonderful evening.

Operator

[Operator Closing Remarks]