India’s largest domestic airline IndiGo has scotched plans to raise funds through a qualified institutional placement (QIP), opting instead to raise money through sale and leaseback (SLB) transactions and other alternative options.
“There are several financing options. The ongoing deliveries of neo aircraft (A320neo and A321neo) in FY22 will bring further liquidity,” IndiGo’s chief financial officer Aditya Pande told analysts during the airline’s post-result call on Thursday.
The airline will not raise funds through the QIP route, Pande said without elaborating on the decision.
The board of directors of IndiGo had in August approved raising up to ₹4,000 crore through a QIP.
IndiGo is one of the pioneers of SLB transactions in Indian aviation. An SLB is a transaction in which the owner sells the aircraft and then takes it back on lease from the buyer. This kind of deal typically removes the aircraft and its associated debt from the carrier’s balance sheet.
At the end of the December quarter, IndiGo had ₹18,365.3 crore in cash, including free cash of ₹10,920.7 crore. Its total debt stood at ₹27,726.10 crore at the time.
The airline reported a net loss of ₹620.14 crore in the December quarter, as compared to a loss of ₹1,194.83 crore in the quarter to September.
IndiGo had reported a profit of ₹495.97 crore during the October-December period in 2019.
Passenger demand fell during the second half of December, after the spread of a new variant of coronavirus from the UK, but bounced back during the second week of January, chief executive officer Rono Dutta told analysts during the call.
“Clearly we want aircraft utilization to be higher. We are confident that revenue will increase with capacity (increment). But, we are not getting an eight week booking period,” Dutta said, indicating that most passengers are still booking close to their travel dates, which is contributing to lower fares.
IndiGo, which had 280 aircraft in its fleet at the end of 31 December 2020, will take deliveries of Airbus A320neo and A321neo planes in the coming quarters. Of the 280 aircraft currently in the airline’s fleet, 272 are on operating lease while 15 aircraft are either owned by the airline or on finance lease.
The airline is in the process of retiring its older A320ceo fleet and replacing them with more fuel-efficient A320neo planes. It currently has 120 A320neo, 111 A320ceo, 30 A321neo and 26 ATR planes.
