Indigo Airlines 2020 Annual Report Summary and Key Takeaways!

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Before we delve deeper into Indigo Airlines 2020 Annual report summary and key takeaways, here is its Q1FY21 performance report card!

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Here are some fun Facts on Indigo!

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CEO Message

“We deeply appreciate the support we are receiving from our stakeholders during this time. Given the uncertainty, it is difficult to predict the timing of return to normalcy, but we are determined to come out of this crisis in a stronger position than when we entered. In that context, we are paying particular attention to four critical aspects of our company including measures to ensure the safety of our customers and employees, reduce our costs, strengthen our brand and further enhance our employee culture.”

Priority to customer safety and well-being

  • Disinfecting aircraft before every departure
  • Spray cleaning the aircraft at every arrival
  • Increased frequency of deep cleaning of the aircraft including wiping of all touchpoints.
  • Providing safety kits to our passengers
  • Mandatory masks on board for both crew and passengers
  • Placing hand sanitizers at various places
  • Discontinuance of meal services; and
  • Ensuring social distancing norms at check-in, boarding. Further, Airbus aircraft cabin is equipped with HEPA filters, which ensures that the virus cannot recirculate

Low costs remain fundamental to the way they do business

IndiGo is a pioneer in bringing low-cost aviation to India. With structural cost advantages coupled with operational efficiencies, they have been able to build one of the lowest cost structures globally. During the current period of crisis, when revenue has nearly dried up, airlines across the globe are emphasizing cost control and reduction of cash burn.

They have also undertaken several cost reduction and cash flow initiatives that have helped to rationalize costs further and utilize cash reserves judiciously. Specifically, they have taken the following actions –

• Announced a salary cut in the range of 5 to 25% across the organization excluding certain employees at the lower pay grades.
• Announced leave without pay for the months of May, June, and July. This action will result in employees foregoing an additional 3% to 17% of their pay.
• Put on hold all discretionary expenses and have deferred certain capital expenditure projects.
• Looking at every element of cost and working hard with the partners for negotiating better prices and terms.
• Rightsizing capacity to the demand in the market. They value the efficiency and structural low costs associated with NEO aircraft and thus we will continue to substitute them for the older CEO aircraft. They are taking deliveries of all-new NEO aircraft and balancing them by returning the CEO aircraft that they had committed to earlier.

Their focus has shifted from profitability and growth to cash management and liquidity This crisis has once again highlighted the importance of a strong balance sheet, particularly, cash reserves.

In times of distress, a strong cash balance built up prudently over the years has provided IndiGo with a cushion to navigate through these difficult times. As a result, they ended the FY 2020 with a healthy total cash balance of 204 billion rupees of which 89 billion rupees were free cash.

Along with this, they have taken and will continue to take a number of actions to shore up liquidity.

In terms of liquidity measures, they are working on a number of initiatives such as:

• Returning older CEOs and getting deliveries of NEOs: The CEOs that we are operating have a higher ownership cost driven by higher maintenance costs and higher fuel burn. As part of the fleet plan, they are working on naturally retiring a number of these CEO aircraft. They will be taking the deliveries of new planes in quarters 1 and 2 of FY 2021 which are more cost-effective and they are in discussions with manufacturers regarding deliveries beyond this period. Further, they have already financed the majority of the deliveries through operating lessors, which will help in improving liquidity.
• Freezing of supplementary rentals: They have been talking to lessors to freeze supplementary rentals and better align these with utilization for a period of 9 months. Since a large number of aircraft are currently grounded and will be operated at much lower utilization levels going forward, there is no immediate need for Indigo to provide for these.
• They have reached out to various suppliers to provide Indigo with more favorable credit terms.
• Moreover, while they have paid dividends in the past, they will not pay dividends this year to conserve liquidity.

All these measures will help us generate additional liquidity of approximately 30-40 billion rupees. We are also looking to raise finance against the various unencumbered assets of IndiGo, which could be a source of additional liquidity for us.

Philosophy of Business

Indigo’s endeavor has always been to deliver a hassle-free experience from the initiation of ticket booking till the completion of the journey. Exemplary customer service is at the core of everything they do, and each year they actively work towards enhancing the same.

IndiGo has become a strong global brand

During the year, they further strengthened international partnerships and enhanced brand presence.

A codeshare agreement with Qatar Airways enabled them to extend the IndiGo experience to passengers across the world. IATA membership has expanded global presence in terms of enhanced partnership portfolio and alignment to the best global practices.

Furthermore, they added 12 global online travel agencies (“OTAs”) to its network and organized GSA meetings across the globe as a part of brand outreach.

About Indigo

IndiGo is India’s largest passenger airline operating as a low-cost carrier. Serving 86 destinations including 24 international destinations, they provide passengers with a simple, unbundled product, fulfilling the singular brand promise of providing “low fares, on-time flights, and courteous and hassle-free service” to customers.

In addition to passenger transportation, activities primarily include cargo and mail services on scheduled flights.

IndiGo commenced operations in August 2006 with a single aircraft and has grown its fleet to 262 aircraft as of March 31, 2020.

The company had placed an order of 430 fuel-efficient A320 NEO family aircraft in 2011 and 2015, of which 114 have been delivered as of March 31, 2020. In addition to this, in October 2019, Company placed an additional firm order for the 300 A320 NEO family aircraft, which includes A321 XLRs in addition to A320 NEOs and A321 NEOs.

At the end of March 2020, it had 100 fuel-efficient A320 NEOs giving them a 15% lower fuel burn compared to the current generation of A320 CEOs without sharklets.

They also have 14 A321 NEOs in their fleet with higher seating capacity, lower unit costs, and longer range compared to A320 NEOs. We had placed an order with Pratt & Whitney to power 150 of our A320 NEO family aircraft.

All the A320 NEO family aircraft that we have today use the Pratt & Whitney GTF engine. In addition to this, in June 2019, we placed an order with CFM to provide engines for 280 of our NEO aircraft. With this order, we have identified our engine partner for the initial 430 A320 NEO family order.

We had also placed an order with Avions de Transport Regional GIE, or ATR, in August 2017, for the purchase of up to 50 ATR72-600 turboprop aircraft. These aircraft have given us the opportunity to, once again, redefine air travel in cities that were devoid of reliable air service so far, or were subject to exorbitant airfares. As of March 31, 2020, we had 25 ATR aircraft in our fleet.

Quick Facts

  • Rs. 204 billion Total Cash Balance  as on March 31, 2020.
  • 262 Aircraft in our fleet  as on March 31, 2020
  • 1650+ daily departures and 75,025,960 passengers served during the year. Launched a co-branded credit card called “Ka-Ching” which offers flight discounts and other benefits to its members. Launched Chatbot, user friendly Mobile Apps and exclusive features like Flexi Fare, Flexi Pay and Plan B on direct channels keeping in mind the customer needs.
  • Best Low Cost Airline – Central Asia and India: At the Skytrax World Airline Awards 2019 – for the tenth consecutive time.
  • Best Domestic Airline: Awarded by FICCI’s first edition of Travel and Tourism Excellence Award. 10 new domestic and 8 new international destinations added during the year.
  • Rs. 69.7 billion: Cash flow from operations generated during the year
  • Ordered 300 additional A320 NEO family aircraft including A321 XLRs.  At March 31, 2020 NEOs formed 44% of total fleet. CFM engines ordered to power 280 A320 NEO and A321 NEO aircraft.
  • 464 pilots, 1,384 cabin crew, 657 engineers and 3,007 airport, customer service and security staff graduated from ifly this year.
  • Operated over 170 cargo flights during the 2 months of non-operation carrying 1,110 tonnes of cargo including essentials and medical supplies.
  • Operated more than 290 repatriation flights serving around 45,000 passengers till June 2020. Fleet size increased to 262 aircraft – added 45 net aircraft during the year Flying to over 55 Tier 2 and Tier 3 cities with 15 new routes added under the  UDAAN scheme during the year

Board of Directors

Management Discussion & Analysis (MDA)

Airlines around the world are confronting the challenge of a sharp decline in demand, complicated by uncertainty as to when the virus will be under control and travel can return to normal.

The collapse in demand has led major global airlines to announce severe cost-cutting measures, urgent requests for government assistance, and in some cases, grounding of the fleet.

Given the global nature of the COVID-19 pandemic that threatens to throw many economies into recession, it could take passenger air travel demand anywhere from several months to several years to recover to 2019 levels.

This return to normalcy in airline travel will depend on multiple factors including the speed of virus containment, lifting of country border closures, restoration of confidence in air travel, and a return to normal economic and social activity.

In the medium to long term, once the crisis is over, the demand outlook for aviation remains very strong in India largely driven by under-penetration, rise in the working population, and expansion of the middle class.


After rapid expansion over the last decade when Indian aviation registered a Compound Annual Growth Rate (“CAGR”) of around 13.6% in domestic demand measured in terms of Revenue Passenger Kilometers (“RPKs”), it slowed down to 5% in 2019.

The deceleration in growth was primarily driven by supply-side constraints due to industry consolidation subsequent to the cessation of operations of Jet Airways. Adding significantly to industry headwinds, COVID-19 hit the aviation Industry in Q4 FY 2020.

In response to the virus, the Government banned international flights with effect from March 22, 2020 and domestic flights with effect from March 25, 2020. Even before these extraordinary measures were taken, the travel demand started to slow down significantly. This had a major impact on the financial performance of the Indian carriers.

Industry Setup

The civil aviation industry in India has emerged as one of India’s fastest-growing sectors over the past few years. India has now become the third-largest domestic aviation market in the world.

The Indian aviation industry has seen an expansion in the total number of passengers from 27.73 million in Q4 FY 2016 to 44.63 million in Q3 FY 2020, growing at a CAGR of 12.6% during the period.

As per IBEF report by 2036, India is projected to have 480 million passengers, which will be more than that of Japan (just under 225 million) and Germany (just over 200 million) combined.

Government Push

To cater to the rising air traffic, the Government of India has been working towards increasing the number of airports.

Airport Authority of India (“AAI”) has planned to invest Rs. 25,000 crores (USD 3.58 billion) in the next five years to augment facilities and infrastructure at the airports. As of March 2019, India had 103 operational airports.

Government has envisaged increasing the number of operational airports to 190-200 by FY 2040.

Introduction of new terminals in Mumbai, Bangalore, Chennai and Kolkata will also add to the infrastructure capacity. Further, The GOI has allowed 100% FDI under automatic route for greenfield and brownfield airport projects.

Moreover, India’s exports and imports have been growing strongly over the past decade. Growth in trade augurs well for the aviation industry as they handle about 30% of India’s total trade by value

The share of travel and tourism in India’s GDP was 10.4% in 2018. Indian economy and the aviation industry have a symbiotic relationship and each benefit immensely with the growth of other.

economic growth has also been greatly benefitted by the growth in aviation industry. According to International Civil Aviation Organization (“ICAO”), for every $100 of output produced and every 100 jobs generated by air transport, an additional demand of around $325 and 610 jobs are triggered in other industries, globally.

The aviation industry is further expected to increase its share in the Gross Domestic Product and help the economy by creating jobs and an increase in production through trade and tourism.

Financial Performance Income

 Passenger ticket revenue: Passenger ticket revenue increased by 25.0% from Rs. 251,576.91 million in FY 2019 to Rs. 314,470.59 million in FY 2020.

Revenue from ancillary products and services: Revenue from ancillary products and services primarily include cargo, special service requests, ticket modification and cancellation, in-flight sales and tours. Revenue from ancillary products and services increased by 30.2% from Rs. 30,309.56 million in  FY 2019 to Rs. 39,458.47 million in FY 2020.

Other Income: Other Income primarily comprises of financial income on the cash and other nonoperating income. Other Income increased by 15.9% from Rs. 13,245.98 million in  FY 2019 to Rs. 15,355.09 million in FY 2020.

Revenue per Available Seat Kilometre (“RASK”): RASK increased by 5.6% from Rs. 3.57 in FY 2019 to Rs. 3.77 in FY 2020, driven by an increase in passenger yield and increase in unit ancillary revenue.

Expenses Total expenses increased by 25.3% from Rs. 299,687.48 million in FY 2019 to  Rs. 375,471.79 million in FY 2020.

The total cash increased by 33.1% to Rs. 203,769.40 million as of March 31,  2020, comprising of free cash of Rs. 89,280.97 million and restricted cash of  Rs. 114,488.43 million. Total debt for your Company was Rs. 227,191.68 million, including capitalised operating lease liability of Rs. 202,848.64 million, as of  March 31, 2020.

Balance Sheet

Profit & Loss

Cash Flows

Covid Commentary

COVID-19 has led to major disruptions across world economies, and has led to the implementation of several government-imposed restrictions, particularly in the travel sector. In India too, the Government took early actions that led to cessation of all scheduled passenger flights for a period of 61 days starting March 25. While, the domestic business largely remained as expected during January to February 2020, we began reducing international operations from January 2020. January and February 2020 results were not materially impacted by this, however, March numbers were particularly impacted. Consequently, the overall Q4 FY 2020 results were impacted as well.

We have taken a number of actions to mitigate the impact and risks of COVID-19 to our business. These actions include cost reduction initiatives, liquidity enhancement, capacity reduction, and improvement in fleet mix. We are extremely focused on ensuring the health and safety of the customers and employees, and have designed  and implemented a new set of  standard operating procedures to combat the virus.

We have planned a phased rampup of capacity in line with demand expectations going forward. Basis this, we aim to deploy around 60-70% capacity in the third quarter of FY 2021, on a year over year basis. Given the uncertainty of the environment we will continue to monitor these plans and make adjustments on the basis of demand, as required.

The A320 NEO aircraft that we operate have structurally lower costs than our A320 CEOs. Hence, we plan to increase the mix of NEO aircraft to our fleet to leverage these cost advantages. We will continue to take deliveries of new NEO aircraft and balance this with the gradual retirement of our CEO aircraft. Most of the new aircraft will be financed through an operating lessor model, generating significant liquidity for us in FY 2021.



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