Booster shot for IPO: IndiGo posts record Rs 1,304 cr profit in FY15

New Delhi: India’s largest airline by passengers, IndiGo, has posted record profits last fiscal, making FY15 its seventh profitable year of operation in a row. According to data submitted to aviation regulator DGCA, the airline declared Rs 1,304 crore net profit for FY15, a four fold increase from Rs 317 crore in the previous fiscal. Total revenues stood of Rs 14,320 crore against Rs 11,447 crore in FY14. The airline also declared a net margin of 9.4 percent.

IndiGo has been able to improve its profits in no small measure due to its tight control on costs and in diligently sticking to the low cost carrier (LCC) model. Speaking to us last month, president Aditya Ghosh had stressed on the LCC model where the airline uses a single aircraft type, ensures high aircraft usage and stays away from frills such as providing free lounges, frequent flyer programmes or complimentary meals on board to remain profitable.

The numbers for IndiGo for FY15 may give the airline much needed fillip just as it readies to approach investors with an Initial Public Offer (IPO) which is expected to be launched sometime next month. As per its draft red herring prospectus already filed with the markets regulator, IndiGo’s growth strategy in future will involve increasing frequencies to markets it serves currently as also expanding to new, under penetrated tier II and tier III cities in India. The DRHP also speaks of entering select new destinations in SouthEast Asia, South Asia and the Middle East.

In the DRHP, the airline has pointed out that since fiscal 2010, Indigo’s revenue has increased with a CAGR of 43.9 percent, EBITDAR has seen a CAGR of 27.5 percent and that the airline has had the lowest CASK (cost per available seat kilometer) among all Indian airlines in fiscal 2014 at 0.18 cents. The airline had commissioned a study by SAP to bring out these numbers. According to SAP, SpiceJet’s maintenance costs during the same year were almost five times higher at 0.9 cents and Jet Airways was close to this at 0.95 cents. GoAir was almost twice that of IndiGo at 0.35 cents while Air India was at 0.34 cents.

According to data filed with the DGCA, IndiGo declared a profit before tax of Rs 1,847 crore for FY15 and capacity in ASKs (which means available seat kilometers) grew from 29.9 million to 35.3 million ASKs.

Last fiscal has been remarkable for the IndiGo story in other measures too. The airline placed the largest ever order for Airbus for 250 Airbus 320 neo aircraft which takes the total number of aircraft Indigo has on order to 430. It also inducted former Bank of Baroda chairman MD Mallya and former World Bank official Anupam Khanna into its board of directors. The airline also augmented its workforce by 1,400 new employees.