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%.