IndiGo gives profit warning following dip in bookings over Coronavirus

Flight occupancy dropped on domestic routes as individuals and companies canceled events and postponed travel.

IndiGo expects the coronavirus (COVID-19) crisis and depreciation of the rupee to hit profit in the fourth quarter. IndiGo, the largest domestic airline by market share, has issued the profit warning following a dip in bookings because of the spread of COVID-19 in the country.

“We cancelled our flights to China and Hong Kong and reduced frequency to certain other Southeast Asian markets. This capacity was redeployed in other markets without having a material impact on our revenues. Over the past few days, however, week-on-week, we have seen a 15-20 per cent decline in our daily bookings. We expect our quarterly earnings to be materially impacted because of these factors,” the airline said in a stock exchange notification on Wednesday.

It added that sharp depreciation in rupee, too, would have an adverse impact on its dollar-denominated liabilities, primarily on account of capitalised operating leases.

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Flight occupancy dropped on domestic routes as individuals and companies canceled events and postponed travel. Last-minute fares, too, have declined 20-25 per cent on key metro routes over a dip in demand. While the plunge in crude oil price benefits the airline, the relief could be limited thanks to sluggish demand.

InterGlobe Aviation, which runs IndiGo, had reported a threefold increase in its pre-tax profit to Rs 556 crore in the third quarter of financial year 2019-20 (FY20) on strong revenue growth. In an investor conference call after the results, it had said modification of its Airbus A320neo engines would be completed by May, but indicated a challenging fourth quarter because of lean season and COVID-19 threat.