COVID-hit Indian airline IndiGo to weigh raising funds through QIP

Visual from The Mint

The board of directors of InterGlobe Aviation Limited, which operates the country’s largest airline IndiGo, will meet on 7 May to consider raising funds through a qualified institutional placement (QIP), the company said in a stock exchange notification on Tuesday.

IndiGo had earlier in January shelved plans to raise funds up to 4,000 crore ($542 million) through a qualified institutional placement (QIP), opting instead to raise money through sale and lease back (SLB) transactions and other alternative options.

QIPs are a way to issue shares to the public without going through standard regulatory compliance, while SLB is a transaction in which the owner sells the aircraft, and then takes it back on lease from the buyer. Such a deal typically removes the aircraft, and its associated debt, from the carrier’s balance sheet.

The latest decision by IndiGo’s board of directors comes at a time when airlines are struggling with a declining passenger demand due to an unabated rise in fresh COVID cases across the country.

Fewer Indians took to the skies for the sixth week in a row for the week to 1 May.

The average number of daily fliers stood at 126,000 for the week ended 1 May, down from 152,000 for the week earli, and less than 193,000 in the week ended 17 April, according to a report by ICICI Securities.

Meanwhile, the second wave of infections, which has brought the country’s healthcare system to its knees, could precipitate a collapse of the domestic aviation sector, aviation consultancy firm Capa India said in a report on Monday.

IndiGo will be the only carrier to emerge from the crisis significantly stronger because of its very strong balance sheet, the report said.

“Nevertheless, despite being better placed to withstand the latest downturn in traffic, IndiGo will also feel a very significant impact,” it added.

IndiGo, which had 53.5% market share in March, reported a fourth straight quarterly loss for the October-December 2020 period as travel demand remained muted compared to the year-ago period due to the covid-19 pandemic. The airline is yet to report its March quarter results.

The airline’s net losses, however, narrowed to 620.14 crore during the December quarter, as compared to 1,194.83 crore losses in the September quarter.

At the end of the December quarter, IndiGo had 18,365.3 crore cash, including free cash of 10,920.7 crore. The total debt of the airline stood at 27,726.10 crore during the same period.

InterGlobe Aviation Limited’s stock closed at 1622 per share, down 2.47% at the BSE on Tuesday. In comparison, the benchmark Sensex closed at 48,253.51 points, down 0.95%.

The article was first published on livemint.com.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.