IndiGo’s FY14 profit more than halves to Rs 317 crore against Rs 787 crore
Budget carrier IndiGo's net profit for FY14 fell 60% as unfavourable industry conditions such as weak demand and intense competition combined with weak CURRENCY to hurt performance after six straight years of robust profit growth.
India's biggest carrier by market share posted an annual net profit of Rs 317 crore for the twelve months ended March 31, 2014, compared with Rs 787 crore a year earlier, according to annual statements filed with the registrar of companies.
IndiGo's CEO and president Aditya Ghosh confirmed the Airline has filed the results but didn't elaborate. The Airline's peers commended its performance. Good business model, solid execution, well done Sanjiv Kapoor, chief operating officer of rival budget carrier SpiceJet told ET. The Airline made some solid scale bets early on which are paying off well.
Our outlook released in April 2014 estimated Rs 350 crore- Rs 400 crore net profit for FY14. The results reflect a very tough operating environment in FY14 which was the worst performing fiscal for the industry said Kapil Kaul, south Asia CEO at Sydney based consultant CAPA Center for Aviation.
The rupee suffered a free fall against the dollar last year, dropping to record lows in August. About 70% of IndiGo's expenses are in dollars, but due to limited international operations it gets far less than 15% of its revenue in the same CURRENCY, according to analysts' estimates.
The slow down in Air Travel also continued. Indian carriers flew 61 million local passengers between April and March, up just 5% on year. To fill planes, airlines led by SpiceJet introduced massive discounts since January. India has the cheapest air fares in the world while being saddled with one of the highest cost burdens, mainly Jet fuel.
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Mohini Porwal [ B Sc]
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