Key highlights from InterGlobe Aviation Limited (INDIGO) Q2 FY23 Earnings Concall
Q&A Highlights:
- [00:13:10] Binay Singh from Morgan Stanley asked about yield breakup of international in terms of revenue in 1Q and 2Q. Sanjay Kumar CRO said that it’s difficult to give the breakup but on revenue, INDIGO is seeing strong demand in the marketplace. INDIGO also continues to see that it will be able to maintain yield and RASK going forward.
- [00:13:29] Binay Singh from Morgan Stanley enquired about the capacity guidance for FY24 over FY23. Pieter Elbers CEO replied that this is the second consecutive quarter that INDIGO is back to a capacity level that’s higher than pre-COVID levels. And this is expected to continue going forward.
- [00:18:26] Lokesh Garg of Credit Suisse asked about International ambitions, if it means more destinations, more frequency and what percentage of flying currently is international in ASK terms. Pieter Elbers CEO answered that today about 25% of INDIGO flying is International. INDIGO expects this number to go up as some markets are still closed like China.
- [00:19:32] Ashish Shah with Centrum Broking asked about asset utilization that in the peak daily utilization was about 12.5-13 hrs and if it’s sustainable going forward. Pieter Elbers CEO clarified that the company is not giving any new guidance today but is using the assets to the maximum of its ability.
- [00:20:55] Ashish Shah with Centrum Broking asked about the Cargo business outlook going forward. Gaurav Negi CFO replied that it’s a little too early to tell. But added that the belley cargo has done well and also there has been incremental growth.
- [00:21:39] Ashish Shah with Centrum Broking enquired that after the fare regulations were taken out what was the change in behavior in market. Gaurav Negi CFO answered that there was not much of impact. 2Q yield was only about 3% down compared to 1Q. So it’s fair to say that sales and yields are holding up.
- [00:23:50] Pulkit Patni from Goldman Sachs asked that in the recent negotiations, given how interest rates are moving, what’s the outlook for the lease cost of new fleet. Gaurav Negi CFO replied that large part of the current fleet is on a fixed rate, so there’s not going to be any impact due to interest rate. Any new lease needs to be assessed between fixed or float.
- [00:34:07] Deepika Mundra with JP Morgan asked about the medium term outlook on maintenance cost on the aircraft. Pieter Elbers CEO replied that it’s little premature to give expectations about maintenance cost going forward.
- [00:35:50] Vipul Garg from Kotak Mahindra enquired that despite the planes being same in 2Q22 and 2Q23, there’s a substantial change in finance cost. Gaurav Negi CFO said that it’s largely driven by forex related impacts, which is going up significantly.
- [00:42:40] Krupa Shanker NJ from Spark Capital asked about employee cost and if a further revision is expected over the medium term. Gaurav Negi CFO answered that INDIGO’s focus now is on pushing up capacity so on a unit level the number will move based on where the capacity settles. So on a unit level, it’s going to stabilize at this level.
- [00:54:43] Binay Singh from Morgan Stanley enquired about operating leverage, and 2Q23 hour utilization rate, if it has gone back to normal levels. Gaurav Negi CFO answered that INDIGO won’t want to share that but added that utilization levels have been higher for INDIGO and they continue to improve as the focus is on putting more capacity.