IndiGo, an Indian low cost airline, anticipates it won’t be profitable until 2022 according to Rono Dutta, CEO of InterGlobe Aviation (NSE: INDIGO), which runs the airline. Capacity is at about 32% of its full potential.
As one of the biggest carriers in the country, it has a fleet of 274 airplanes and has international flights as well.
“It’s going to be very hard to get profitable at this low levels of flying. But our plan is that we should be at 75% of capacity by early next year. Once we hit that number, we see a better shot at getting profitable,” Dutta told CNBC in an interview on “Street Signs Asia.”
“We won’t be profitable for the next 18 months is my guess,” he said, though emphasizing that the main priority at the moment is generating positive cash flow.
The company plans to raise approximately USD534 Million in funds from qualified institutions placement. This method permits publicly-listed companies within India to collect money from investors by selling shares and avoiding the lengthy regulatory process it usually implies.
“Our expectation is by mid-next-year, we should be at about 85% of capacity and India’s a little different from other mature economies,” Dutta said.
InterGlobe Aviation announced a pre-tax loss of about USD379 Million last month compared to the prior year’s over USD200 Million profit. Ultimately, revenue plummeted 91% throughout the quarter as flights remained grounded for two months when India faced a national lockdown.
“We are continuously looking at our cost structure. We have taken some painful steps in employee costs. At the moment, we don’t have any plans to go further,” Dutta said.