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InterGlobe Aviation share price slips over 6% as airline says capacity, revenue likely to be hit in FY20

InterGlobe Aviation, the parent firm of IndiGo, pointed out multiple factors while listing out the 'revenue headwinds' for the present fiscal in its investor presentation

twitter-logoBusinessToday.In | December 5, 2019 | Updated 17:49 IST
InterGlobe Aviation share price slips over 6% as airline says capacity, revenue likely to be hit in FY20
The airline said maintenance cost, which was recorded at Rs 1,530 crore in Q2 FY20, will remain at elevated levels till FY22

Shares of InterGlobe Aviation fell over 6% on Thursday after the airline lowered its capacity growth guidance for FY'20 and designated the 'A320neo issue' as one of the 'revenue headwinds' of 2019-20.

Reacting to the presentation submitted post-market hours on Wednesday, the share price of IndiGo opened 1.5% lower today and later fell 6.31% to the day's low of Rs 1,316.55, against the previous close of Rs 1,405.20 on BSE.

Market depth data on BSE suggested 95% selling compared to 5% buying on the stock. In terms of volume, 4.81 and 32.71 lakh shares changed hands on BSE and NSE.

InterGlobe Aviation shares trades lower than 5, 20, 50, 100 as well as 200-day moving averages. The share price of IndiGo has declined more than 7% in one week and over 8% in one month.

InterGlobe Aviation, the parent firm of IndiGo, pointed out multiple factors while listing out the 'revenue headwinds' for the present fiscal in its investor presentation. This included pilot shortage, the NEO issue and uncertainty around the slots and bilateral rights that belonged to Jet Airways, which can lead to lower utilisation and shorter booking window. The airline added these headwinds were likely to disappear by summer of 2020.

IndiGo said it was working with the manufacturers Pratt & Whitney and Airbus to acquire sufficient spare engines and 'mitigate the risk', after regulator DGCA ordered the low-cost carrier to replace engines of all its A320neo aircraft before January 31.

The airline highlighted this matter as one of the 'revenue headwinds' of 2019-20 and said that the same is likely to have an impact on future capacity. "Company expects its capacity to grow by 22-23% for FY20," the filing said. This was lower as compared to the earlier stated guidance of 25%, which was announced during September quarter earnings.

The company has lowered its capacity growth guidance for the second time since October 24, 2019, when the airline submitted its unaudited standalone and consolidated financial results for the quarter and half-year ended September 30, 2019.

Consequently, the airline said maintenance cost, which was recorded at Rs 1,530 crore in Q2 FY20, will remain at elevated levels till FY22.

"Despite the mark-to-market (MTM) hit on capitalised lease liabilities, we expect our profits to be similar to Q3 FY19 in Q3 FY20," the filing added.

Share price of InterGlobe Aviation closed at Rs 1,320.20, declining 85 points or 6.05% against its previous close on BSE.

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