IndiGo mulls cost cuts as coronavirus hits travel demand

The airline is also planning to return older aircraft in its fleet to leasing firms

Airlines across the world are looking to slash costs and conserve cash as the coronavirus pandemic cripples travel demand. AFP  

IndiGo, India's biggest airline, plans to cut up to 40 billion rupees ($533 million/Dh1.9bn) in costs and speed up the return of older planes to leasing companies as it grapples with the fallout from the coronavirus pandemic.

Airlines around the world have been hammered by a slump in travel due to restrictions aimed at containing the virus, and few expect a quick recovery.

IndiGo has about 120 older A320ceo planes that cost more to maintain and plans to return them to leasing firms over the next two years, depending on demand, chief executive Ronojoy Dutta said, adding domestic travel was likely to return sooner than international.

The company, which currently has a fleet of about 260 jets, said it would continue to take delivery of newer, cost-efficient A320neo planes. However, like many rivals, it is in talks with manufacturer Airbus about exactly how many new aircraft it will take this year.

"In times like these, we must shift our focus from profitability and growth to managing cash and liquidity," Mr Dutta said, after parent Interglobe Aviation reported a quarterly net loss.

"We see an opportunity to make the fleet more efficient," he said, adding IndiGo was revising its capacity guidance for this financial year.

Operations chief Wolfgang Prock-Schauer told a conference call IndiGo planned to take at least the next 30 plane deliveries from Airbus.

Finance chief Aditya Pande said the airline would review salary reductions it had already made, in addition to not paying a dividend and negotiating better payment terms with suppliers among measures aimed at saving about 30-40 billion rupees.

Interglobe Aviation reported a net loss of 8.73 billion rupees for the quarter ended March 31, including just over a week of India's coronavirus lockdown.

That was down from a profit of 5.90 billion rupees a year earlier, due mainly to higher aircraft repair and maintenance costs as well as unfavourable foreign exchange rates.

IndiGo's cost per available seat kilometre (CASK) rose 25.8 per cent to 4.21 rupees, while revenue per available seat kilometre (RASK) rose by 0.5 per cent.