InterGlobe Aviation Ltd-led IndiGo expects to see recovery in domestic air traffic level by Q3 of FY22, company CEO Rono Dutta said in the post-earnings conference call.
The airline has witnessed a severe fall in air traffic since March as the second wave of COVID-19 affected the country.
While the country's largest airline was witnessing daily air traffic of nearly 180,000 passengers with "strong daily bookings" until February, the demand started declining since March.
The international capacity deployment for IndiGo was also at 30 percent of pre-COVID capacity in January-March as most of the flights operated under air travel bubble arrangements and as charter flights.
The airline expects a "meaningful" return of international traffic only by Q4 of FY22 and plans to restore the growth plan for the international segment once the COVID crisis is over. It will continue to focus on the international destinations within 6-7 hour distance from the metro cities under its network expansion strategy, Dutta said.
As the demand continues to be uncertain, the airline has planned to raise Rs 4,500 crore via credit lines and the sale and leaseback model. The airline is already in talks with several banks for a credit line and with vendors on aircraft financing, the management said.
"We have visibility of Rs 4,500 crore of funds through a mix of credit line and sale-leaseback model..we continue to explore options beyond this..we are talking to several banks...we have also secured board approval to raise funds by QIP up to Rs 3,000 crore rupees," Chief Financial Officer Jiten Chopra said.
"We want to have a strong balance sheet, looking at Rs 3,000 crore as disaster risk insurance," Dutta said.
As the traffic was very weak until May, the airline expects cash burn to be higher in the Apr-Jun quarter and is working on saving costs in aircraft ownership and non-discretionary areas as not much scope is left to cut costs on the employee front.
"We took a 15 percent lay off, then we all took a severe cut and added leave without pay so year on year employees costs down about 30 percent. For FY22, first thing we will do is get rid of leave without pay," Dutta said, adding that the employee costs for FY22 will not be down by as high as 30 percent.
While the passenger segment is uncertain and dependent on the behaviour of the virus, IndiGo has seen 9.6 percent growth on year in the cargo segment for FY21. As a result, it has ordered four freighters, first of the lot will arrive in the first half of 2022. For now, the airline has converted ten of its passenger aircraft for cargo operations.
In capacity addition, the airline expects the fleet count to broadly remain the same as it is replacing its old CEO fleet but the number of seats is expected to go up.
In light of the demand uncertainty amid COVID pandemic, IndiGo's board of directors have not recommended dividend for the current year, Dutta informed.
Currently, the airline has scheduled for 50 percent capacity deployment for July in light of the government's restrictions on capacity. Recently, the government cut down the permitted aviation capacity to 50 percent from 80 percent earlier.
"We objected to fare bands and capacity restrictions. Looking ahead in July we are scheduling 50 percent of our capacity..we have written to the aviation ministry that we intend to go higher..hoping govt will remove capacity restrictions by July 31," Dutta said.
IndiGo on Saturday posted a net loss of Rs 1,147.2 crore in the quarter ending March 2021 as revenues continued to fall due to the COVID-19 pandemic. The airline had posted a net loss of Rs 870.8 crore in the same period last year.
(Edited by: By Aditi Gautam)