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Indigo prepares for 3rd wave in India by building up Cash Reserves

As India is slowly coming out of the deadly COVID-19 2nd wave and Indian airlines begin seeing some recovery, low cost carrier Indigo is already preparing for 3rd wave.

In an interview with Financial Times, Ronojoy Dutta, CEO of Indigo, spoke about the future of Indian aviation and the carrier’s plans. Indigo plans to build cash reserves of over ₹7,500 crores ($1.02 billion) to ensure that it can weather challenges in the future. This comes after the airline recorded a ₹1,174 crore ($160 million) loss for the 1st quarter of 2021 (Q4 of the fiscal year).

In April-June quarter, losses are expected to get deeper as the this period saw passenger levels fall drastically due to the 2nd wave in India.

Doctors in India have warned that another wave (3rd wave) is expected and is extremely probable, and everyone must prepare. And for this reason, Indigo has already started preparations for any further shocks. The carrier has already passed a plan to raise ₹3,000 crores ($410 million) from qualified investors in the future. In addition to this, IndiGo also plans to raise another ₹4,500 crores ($615 million) through bank credit lines and sale-and-leaseback deals with lessors.

The airline is not taking any chances and is creating a huge fund to survive. Dutta, in a statement, said:

The doctors tell us there will be a third wave. There are no ifs and buts about it, and it will probably come around November, December…The board says ‘look, the environment is volatile… What if we go for another three months’ shutdown, then what? And the revenue is zero?’ It’s for that sort of disaster scenario that we are building insurance.

The 2nd wave has hit airlines hard. While flights were not suspended as in the 1st wave, passenger traffic fell sharply. From 3,13,000 passengers a day in the 1st week of March, only 57,000 travellers took flights on average in late May. However, airlines in India are beginning to see some recovery.

Meanwhile, Indigo recently announced flights to Darbhanga, Bihar from Kolkata and Hyderabad.

Featured image by TravelObiz

What do you think of Indigo’s preparation for 3rd wave? Let me know in the comments section below.

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