On Monday, 15 June 2020, Indigo Chief Executive Officer, Mr. Ronojoy Dutta said in an interview that the private airline company can raise Rs. 3,000 Cr. to Rs. 5,000 Cr, by leasing out its owned assets, including aircraft and engines.
“We own some aircraft, some ATRs, a lot of engines, some A320s,” he said. “We are putting them back on lease. That will give us Rs. 3,000-5,000 crore of funding. I am quite optimistic about the prospects of indigo.”
The chief executive officer also said that indigo will make a purchase of around 120 fuel-efficient neo aircraft over the next two years and will simultaneously retire nearly the same number of A320s. Hence, the capacity of the company will remain stable in the face of the pandemic.
Dutta said, “We have a lot of new planes coming. The terms of new planes are for discussion. (In case of) the old planes, we have obligations and we are meeting them. We are returning 120 old planes, getting 120 or so new planes coming over two years. Those are under discussion.”
The airline has cut its expenses by 30 percent and decided to slash employees’ salaries by 5-25 percent in March. It also implemented a ‘leave without pay’ program in May.
Dutta said the airline plans to focus on the efficiency of the aircraft in use, to reduce costs. The private company is currently operating at 30 percent of its capacity. It is also negotiating agreements with its suppliers for lower costs.
“Our relationship with lessors is a key success factor,” Dutta stated. “We are working with lessors. We are paying all our bills. We are trying to reach an amicable solution with the lessors. We are negotiating terms of new plans with lessors.”
“The environment is hostile, we are doing 30 percent of our capacity, and demand is not there. We want to keep our focus on the cost because if we do not do necessary cost-cutting, the whole company will go down,” he said. “We are taking baby steps at this time; we don’t want to take big plunges into this.”
In another interview, Dutta told that indigo will start international flights, possibly to Gulf countries, by July this year. However, the reopening of international aviation is still not permitted by the Centre.
“Our fixed costs are 40 percent of the system. So, flying 30%-40%-50% of our capacity, there is no way we can cover that and make any profits. We have to have enough planes in the air to cover fixed costs and then we can talk about profitability,” Dutta said.
According to the CEO, indigo wants to expand to 50 percent of capacity, then to 70 percent and finally to 85 percent. He asked the central government to allow airlines to increase capacity. He said the airline believes the best-case scenario for 2021 is passenger travel at 85 percent capacity.
The country’s largest airline has also put on hold all discretionary expenses and has deferred certain CAPEX projects as well. The airline has decided not to pay any dividend this year due to the pandemic.