Earnings Call: Q1 2022

Jul 27, 2021

Evening, ladies and gentlemen, and welcome to Integra's Conference Call to discuss the First Quarter Fiscal Year 2022 Financial Results. My name is Janice, and I will be your coordinator. At this time, the participants are in listen only mode. A question and answer session will follow today's management's discussion. As a reminder, today's conference call is being recorded. I would now like to turn the conference over to the moderator, Mr. Ankur Goyal, Head of Investor Relations for Indigo. Thank you, and over to you, sir. Good evening, everyone, and thank you for joining us for the Q1 fiscal year 2022 earnings call. We have with us our Chief Executive Officer, Ronu Dutta and our Chief Financial Officer, Jitrain Chopra, to take you through our performance for the quarter Ulsgan Prakshavo, our Chief Operating Officer and Sanjay Kumar, our Chief Strategy and Revenue Officer are also with us and are available for the Q and A session. Before we begin, please note that today's discussion may contain certain statements on our business or financials, which may be considered as forward looking. Our actual results may be materially different from these forward looking statements. The information provided on this call is as of today's date, and we undertake no obligation to update the information subsequently. A transcript of today's call will also be archived on our website. We will upload the transcript of today's prepared remarks shortly. The transcript of the Q and A session will be uploaded subsequently. With this, let me hand over the call to Ronan Datta. Thank you, Ankur. Good evening, everyone, and thank you for joining the call. Hope all of you are safe and doing well. We announced our Q1 fiscal 2022 financial results today. We reported a net loss of INR 31,700,000,000 for the quarter ending June as compared to a net loss of INR 11,500,000,000 for March quarter of fiscal 2021 and INR 28,400,000,000 for the June quarter last year. Needless to say, we are deeply disappointed by these results. Last year for the June quarter, we had reported a net loss of INR 28,400,000,000 and this year we have a loss of INR 31,700,000,000. Let me first explain the reason for the higher loss. INR 2,900,000,000 was due to the foreign exchange losses and INR 1,500,000,000 pertain to lower finance income. Without these 2 non operational items, Our losses would have been roughly the same. The next question, of course, is that given we had around 9,100,000,000 higher ASKs, Why could we not generate more positive contribution from this additional client year over year? Fuel unfortunately was a big negative driver and our year over year fuel costs adjusted overall capacity impacted us by INR 5,400,000,000. You will, of course, be aware that year over year fuel price has doubled. The second large factor was the severe impact that the COVID second wave had on our revenues in this quarter. The best way to illustrate this COVID impact is by reading out to you our monthly revenue performance for the period April through July. April revenue was INR 15,400,000,000. May was INR 6,700,000,000 and June was INR 9,600,000,000 And July is projected to recover back to April levels. Sequentially, our CASK for the June quarter increased by 43.7 compared to the March quarter on account of higher fuel price, rupee depreciation and 41.5% lower capacity deployment. Our cash burn also increased from an average of INR 190,000,000 per day in the March quarter to an average of INR 334,000,000 per day in the June quarter because of lower demand and lower capacity deployment. Unfortunately, with the 2nd wave, we faced similar challenges as we did last year and had no option but to reinstate leave without pay for our employees. On the cash side, we continue to look at ways to bolster our balance sheet through various sources of funds and have also obtained shareholder approval to raise up to INR 30,000,000,000 of QIP. We ended the quarter with a free cash of INR 56,200,000,000. In the near term, Our primary focus remains on adding capacity so that we can get back to pre COVID levels as quickly as possible. Currently, we are restricted to 65% capacity deployment, but we are in continuous dialogue with the ministry, and we are hopeful that we will see a gradual relaxation of these restrictions. Of course, the additional capacity will have to be tempered by the reality of So that we are always covering our variable costs and generating cash to cover the fixed costs. Scheduled international operations remain challenging, and our short term focus is on increasing the capacity Deployed through air bubble arrangements and charter. As we have reiterated throughout the pandemic, our focus is to manage our cash levels, Improve our cost structure, run a high quality airline with highly engaged employees and position ourselves for the future. The core to our business remains our customer service. Some of the key accomplishments during the quarter are: number 1, Globally, Indigo was ranked as the 3rd most functional airline by OAG ranking for January through June. Domestically, we have been ranked as number 1 in OTP consistently for the past 4 quarters. Our customer complaint rates in the June quarter were the lowest at 0.1 complaints per 1,000 passengers as compared to the rest of the industry average of 1.09 per 1,000 passengers. We have been facilitated as India's best place to work in transportation by Great Place TO Work Institute. While the impact of the COVID second wave has been severe On both the income statement and our cash flow, we are pleased to see that as COVID numbers declined, traveler revenue also rebounded slightly. This has obviously been a very bad quarter, and the key question in investors' mind must be, when do we start seeing light at the end of the tunnel? Given the vaccination rates, a reasonable scenario is that the 3rd wave will be relatively flat. And as such, we hope to be at 100% of COVID domestic capacity by the end of the year, after which we can hope to return to normalcy on revenue. And with that, let me hand over the call to our CFO, Jisank Chopra. Thank you, Ronald, and good evening to everyone. Hope all of you are safe and doing well. For the quarter ended June 2021, we reported a net loss of INR 31,700,000,000 compared to a net Loss of INR 11,500,000,000 for the quarter ended March 21. We reported a negative EBITDA of INR13.6 billion compared to an EBITDA of INR6.5 billion in the quarter ending March 21. In the March quarter, we operated at 75% of peak COVID capacity, but during the June quarter, we operated at only 44% of peak COVID capacity. Such lower capacity deployment has negatively impacted our performance matrices. Some of the key variations from March quarter are: We operated at a load factor of 58.7%, a reduction of 11.4 points. Our RASK reduced by 16.4%, primarily driven by reduction in our load factors by 11.4 points and reduction in our yields by 5.7% to INR 3.48. Our fuel CASK increased by 8.5% compared to a 12% increase in average Our cash exude increased by 56%. The update on our cash position is as follows. We ended the March quarter with a free cash of INR 71,000,000. On average, net cash burn during the quarter was INR 334,000,000 per day. At the end of March quarter, we had announced liquidity initiatives aggregating INR 45,000,000,000. Further, in the June quarter, we were able to secure additional liquidity of INR 10,000,000,000, taking the total initiative to INR 55,000,000,000 for the year. Of this, we infused INR 14,000,000,000 during the quarter. We are also in discussion with various lenders to further enhance our liquidity position. Additionally, we continue to work with our various partners to secure favorable credit lines. We ended the June quarter with a free cash of INR 56,200,000,000 and a total cash of INR 170,700,000,000. On other key balance sheet numbers, we ended the quarter with a capitalized operating lease liability of INR 259,300,000,000 And total debt including the capitalized operating lease liability of INR 316,900,000,000. The strength of our balance sheet is our biggest defense in the fight against COVID-nineteen, and we will continue to enhance this strength by focusing on cost reduction, Equity Enhancement and Capacitare Vision. With this, let me hand it over back to Amrit. Thank you, Ronu and Jiten. To answer as many questions as possible, I would like to request that each participant limit themselves to one question and one brief follow-up if needed. And with that, we are ready for the Q and A. Thank you very much. We will now begin the question results. We take the first question from the line of Amit Shah from BNP Paribas. Please go ahead. The reason for the loss was $2,900,000,000 Due to FX. And the $1,500,000,000 was because of? Lower interest income. And also for July, what is the revenue trending at? I missed that number. Like we said, we gave you the April number. And then we said July looks like it will be similar to April. Okay. Okay, that's it. Thank you so much. Thank you. The next question is from the line of Vinay Singh from Morgan Stanley. Please go ahead. Hi, Piyush. Thanks for the opportunity. Actually, I had two questions. Firstly, on the quarter, We've seen increase in staff costs. Could you talk a little bit about that on a sequential basis? Along with that, we've also seen ancillary revenues as a percentage of revenues go up. So any sort of a one off or anything on that? And secondly, any outlook on the Q2? Typically, we see that Q2 is the weakest quarter In every financial year, this time as things are opening up, crude prices are high, are airlines able to pass on the Good question. Our yields are actually trending down. If you could comment on that. Thanks. Yes. So regarding the seasonality, We think COVID has sort of trumped seasonality by a big factor. So really it depends on how COVID is performing. And as you know, COVID has the numbers are coming down. They're stalled at about 40,000 cases a day. We hope they continue to drop. So really, we think that seasonality will be a factor once we get back to normal, but not for now. Now to the other question of staff costs. Part of that has to do with mostly driven by pilot costs. What we're doing with pilot training, where we're holding people. As you know, we had a lot of people coming in from other airlines. And they were in training for a long time. Now they're coming out of training and there's a little bit of cost increase because of that. Those were your two questions, I think, Seasonality and SafCo. And also on the ancillary revenue, like if I look at the ancillary revenue for the quarter, it's only 26% Below your best and steady run rate. So what's happening there? This is actually doing well in terms of cargo. So when you're comparing it to which quarter, how are you seeing the trends are less? All in all, if you could just share the cargo number of it is that how much will be Same quarter last year. So, ethylene average number is actually not less. If you look at the capacity, which is I'm sure you're looking at sequentially, right? And if you look at sequentially, our cargo numbers has Pretty much the same as last quarter. And in fact, some of our ancillary revenues like cancellation, etcetera, has been steady for the quarter. If you look at from a capacity perspective, though where capacity has fallen from last quarter, but we're still holding on good on the ancillary revenue because Cargo and diesel, other nature. Okay, thanks. I'll come back in the queue. Thank you. The next question is from the line of Farooqn Kannodia from Ahmed Capital. Please go ahead. Hello. Good evening, everyone. Thank you for giving an opportunity. I have two questions. One is on the yield side. So passenger yields, they fell sequentially Despite fare bans in place and government also increasing the lower end of the fare bans in the month of June. If you can throw some color there, what were the drivers behind lower passenger yields? And the second question is On the lease rental side, that number looks to be much higher compared to the activity that we did in 1Q FY 2022. If you see 2Q FY 2021 was a year where we posted similar revenue, but the lease rentals were much lower, plus we also had Disposals of CO happening in this quarter. So why this number appears to be high on the higher side? So if you can just give Your thoughts, Vincent. Yes. So first on the yield side. Clearly, COVID impacted the yield a lot. And really, it was again a May phenomena, Which really hurt us. So through February, as you know, things are looking better, things are going okay. And then once COVID-two hit, The traffic really dried up and when traffic dries up, the yield dries up too. As far as the lease rentals, if you're looking at comparing it to the revenue, things have happened. We have obviously taken delivery of new aircraft and at the same time, our returns were impacted by COVID. So we had a number of re deliveries that were slated, but they fell short because many of the MROs were closed. And therefore, our overall lease costs would be higher, yes. Okay, okay. I also want to say though, but as the COVID is disappearing, The least we are pushing out these redeliveries at a faster rate and by the end of the year we hope to catch up again. Okay. So historically I believe this number is like INR0.8, INR0.9 per ASK. Is that a fair way to look at it on a longer term basis or will this trend up As we take deliveries of the new aircraft? Well, if you're comparing it to revenues, We are absolutely sure when we get back to normal revenues, the lease costs will not be a factor. Right now, clearly, revenues are subdued, lease costs remain fixed And redeliveries have slowed down. So that is the issue. Once we get back to redeliveries being pushed out, which will happen, We get to more international flying particularly, then the lease cost per revenue will be back to normal, yes. Thank you. Thank you so much. So, Ganodia, does that answer your question? Yes, yes. Thank you. Thank you so much. Next question is from the line of Deepika Moogda from JPMorgan. Please go ahead. Hi, good evening and thanks for taking my questions. So, firstly, on the liquidity, Could you give a broad break up of the RMB50 1,000,000,000 of liquidity for the year? So as I mentioned in my commentary also, we have we are talking To our previous lenders, but we don't normally give a breakdown of our liquidity. Right now, our number is at RMB 55,000,000,000 which we have called out And we'll keep enhancing it as we continue engaging with more dentists. Okay. Secondly, on the employee cost reductions, how much was it Applicants in the June quarter or is it going to be starting from the September quarter? Also previously, you've given a guidance for employee cost So the year. So any similar guidance for FY 2022? FY 2022, no, I don't think we can do that. Right now, our employee costs are down about 28%. And we haven't I mean, there's no reason why that should change. It's clearly flat. But at what point we will start giving pay raises, taking back all the pay cuts, all that will depend very much on the environment. Yes, go ahead. Yes, so last quarter, before you were taking this by the second day, you were very constructive on the In line with the traffic recovery, could you give some color on lifetime for the next few quarters Anurag, you may ask. Excuse me, are you asking about What is the color on the traffic forecast? Is that what you're asking? Very constructive on yield. I'll hear you. Okay, I'll join back in the queue. Thanks. Okay, sure. Thank you very much. We take the next question from the line of Arvind Sharma from Citigroup. Please go ahead. Yes. Good evening, sir, and thanks for taking my question. First question, a more structural one. India is a market leader with almost The 3 quarter fare of the market share. But despite that and given the cost pressures in the fuel side, the yield has been another spot. So do you think that as traffic comes, the yield would be at least relatively higher than the players? Or do you think the Indian market would be commoditized for a longer time and therefore, the market leadership might not necessarily translate into better yield compared to competitors? No, I mean, I think the yield pressure we are seeing right now is purely driven by COVID. So February, as I think we mentioned, we were quite optimistic. The yields were good. And I think we'll at least recover to pre COVID levels. Then it's a question of well, after that, can we go higher? So I don't see any permanent impairment of yield in any way at all. It's purely driven by COVID. Sure. Thanks, sir. So just one more question on the lessor side. Given that operations have been weak, There are restrictions on the capacity. Have there been any further negotiations with the lessors regarding the sub community rentals or the cash centers In terms of quantity or time lines of payment? So as far as the lessors are concerned, we take a long term view of this. There's a pipeline between OEMs through LESSOR to Indigo, and we very much cherish that pipeline. We want to keep it strong, And we look at long term relationship. So we've had discussions with both OEMs and vessels and to some extent they have been flexible. But we are not in a mode of we are not going to pay you things that are up and we'll tell you later we're not in that mode at all. And that's not just true for lessors. Whether it's airport or oil companies, we make sure that all our bills are current. We don't have any payables built up at all. Great. So that's great to know. Sir, if I could just ask a very small data question. In the new accounting norms, the new centers are Divided into finance cost and depreciation. Could you share that number? How much is in the finance cost? How much in depreciation? No, we don't share that number. No problem, sir. Thank you so much for taking my question. Thank you. The next question is from the line of Aditya Makaria from HDFC. Please go ahead. Yes, sir. Maybe a little bit of a larger picture question. The corporate of the business travel We'll come back at some point of time. But what are the trends you are seeing? Maybe you could talk about July or generally how you've seen it? And how do you see this particular segment evolving? That's my first question. I'll ask Sanjay Kumar to answer the In terms of profit business, we have seen recovery of almost 50% until about March before the 2nd wave hit. And after that, of course, there have been downturn of the business. But what we saw was certain industries like manufacturing, infrastructure, pharma, banking, I'll get it. They kind of saw better recovery compared to some of the IT consulting and professional services industry. What we are hoping is as the COVID wave second wave is coming down, we will be seeing the recovery in these sectors once again, which will kind of be close to about 40% to 50%. And IT consulting in these kind of industries might take a little longer than what We can expect in certain parts of the industry. So we'll see gradual recovery in next few quarters, I guess. Sure. And how do you just see the work from home, let's say, pre COVID corporate travelers on a base of 100, Once things normalize because of things like work from home, do you see a more realistic level at maybe 70% or 80% I mean, any thoughts you could just share? So I think we've shared before, and I don't think our numbers have changed. It used corporate used to read 20% of our traffic. And then it shrunk to about 7%, 8%. And we our best guess is it will stabilize at about 13%, 14%. So it won't recover to 2020, but it will probably hold at about 13%, 14%. Okay. Got you. Thanks a lot. Thank you. The next question is from the line of Anshooman Dev from ICC Securities. Please go ahead. Yes, hi. Thanks for the opportunity. My first question is regarding the debt number, if you can share the debt number ex finance lease and ex capital lease obligations. So we invested RMB269 point 3,000,000,000 of capitalized operating lease and total net of INR 316,900,000,000. So $369,000,000 minus $270,000,000 would be roughly the kind of normal debt? Yes. Okay. Thank you. And the second question is regarding QIP. So If you could understand, tell us what is the delay in QAP because the way we look at the way we see it like the The big cash arbitrage that we had in term with our peers is now shrinking in the sense that they are in deeper debt, but We are also losing very valuable cash. So and to both of QEP could be an important step in bolstering our balance sheet. So I just wanted to understand the timelines and the possible reasons for the delay. Okay. So I'll just make one statement on QIP, and I don't think we're in a position to take further questions on this issue at this time. So here's the statement I'll make. Given the current cash position of the company, we continue to evaluate timing and size of any QIP, full stop. Okay. Thanks. Thank you. Thank you. The next question is from the line of Karshal Kumar from HSBC. Please go ahead. Yes, hi. Thanks for taking my question. I had Two questions, if I may. First of all, so you mentioned that July revenue is almost similar to April. So does that mean your profitability, if you look at the profitability at the profitability level, it's only worse than April Because fuel price itself is almost 20% versus April and then of course all the other employee costs and all Looks like slightly higher. So do you think in terms of profitability, the July looks like worse than April? That is my first question. And secondly, in terms of advanced things, how do you see I mean, so how do we expect your working capital to play out In case your advance sale is not as good as it used to be, so how do we look at the advance sale in terms of And unbuckling that first. Thanks. Okay. So let me talk about how revenue is Shaping up. As I said, it's a very, very volatile environment. We get periods in which we are quite optimistic, then we go to pessimistic, then we become optimistic again and all within a very, very short period of Very compressed cycle. And it's really all driven by the COVID numbers. If you want to know what's going to happen to our revenues, if you just track the COVID numbers, you'll get a very good So May was I don't know how to say what's the right adjective. It was distressing in terms of how Quickly, the revenue shrunk. But that again was, remember, at 400,000 levels of infections per day. Now we are at 38,000, 39,000 infections per day. So of course, the revenue is improving. And therefore, I don't think we should Say, okay, last quarter it was this and then for next quarter it will be similar. We have the quarter which will be sort of June, July, August, Definitely shaping up to be better in terms of the revenue numbers. Now our forward bookings are picking up, but they're not as strong as they were back in February. Again, all based on COVID. So we have reasonable optimism for the quarter relative sequentially. But again, if tomorrow COVID-three hits and the cases spike, within a week, we'll change that year. So it's very, very volatile in that sense. But then why you want to fly more? So you initially commented that because your oil price is high And that's why despite flying more capacity, your losses are higher than last quarter, I mean, since last year. So What will make you to confident that your losses will come down if you fly more despite having such a high fuel price and lower yields? Yes. So we watch that number very, very carefully. And you're right. It's a very much a balancing game Of how much capacity we should put into the market. And we are not doing any long term planning at all. It's almost like, okay, next week, what should we do? And our goal is to make sure that we're always covering our fixed costs. And we've said before, I think that our fixed costs are in the range of 45% to 50%. And as long as we can cover that, we should be willing to put capacity out in the market. But that number also changes depending on the yield. If the yield is low, that 45% becomes higher. So we are watching all this carefully, and we're trying to make sure that no matter what we do, We are cash positive and we're always contributing towards fixed costs. Okay. Thank you so much and good luck. Thank you. Thank you. The next question is from the line of Aditya Mungia from Kotak Securities. Please go ahead. Yes, Can you hear me well now? Yes, sir. Thank you. So thanks for the opportunity. I had two questions and both of them actually were on fee. I wanted to get a sense if you give a sense of the revenue number On a monthly basis, it will help if you could give us a similar kind of number or it used on a monthly basis because as you pointed out, one should Kind of take out the how are the questions going to be? I'm not sure that will be perfectly helpful to you, frankly. We're giving you the overall revenue number, and that's what's important. And that's the combination of load factor and yield. So now if I tell you a yield number, you'll say what's the load factor, what's the capacity, much are you flying? So I'll ask few more questions. Well, the real important issue is how much revenue are you generating? How will we get there? We can get to revenue through capacity, we can get to revenue through yield, we can get to revenue on load factors. So the final product is how much revenue. And normally, we don't share monthly data, but we thought this year in particular, it was important to share that, which is why we've given you the revenue number. Got that, Bruno. The second question that I had was, so the context is the declining share of Business travel or corporate travel as you think it would happen over time versus pre COVID. And the question I wanted to ask is that does that have any impact Or should it have an impact on the overall interest that the company would be able to earn because certain passengers would Those are 2, the date of travel would be lesser in number. And if so, are the means and ways of probably managing the situation that deals are not impacted? So this is a mixed bag. So all our bookings are closer in now. Before this, the 60 day bookings, 30 day bookings. And part of the challenge during this May decline Well, hey, the bookings are happening in the last 5 days. And some of those bookings are happening at quite high East. So there was a big Spread between corporate travel and retail travel, if you will, before because part of it was also Asia booking. Now that everything is compressed, the yield difference between business and retail has also been compressed. So that's the good news. Also, as we've said, travel in India is among the highest sorry, the lowest yielding in the world. So there's not much room for yields to go any lower. They can only inch up slowly. And then we're talking of India growth story and the Middle income. So I'd like to say in a very sort of emphatic way That yes, COVID is a big crisis, no question. But it is a short term crisis. And we don't want to lose Sight of the longer term picture. Otherwise, we sort of lose the script. And the longer term picture is the India story remains strong. I mean, look around, look at other industries, The industry is very much there. The middle income growth story is very much there. So while yes, oh my god, what the next quarter and the quarter after that is all very important. When we look at the long term, we are saying, listen, let's just keep the cash level managed. Let's run a really good airline. Let's really focus on the quality. And then let's make sure our fleet is efficient, that get rid of the fuel inefficient planes that we've got the right size of the fleet and focus on the longer term. And the longer term picture I could tell you is a table Pumping great story. And we're not losing sight of that. Those are my questions. Thanks for your answers. Thank you. Thank you. The next question is from the line of Chintan Zaid from Samaksha Capital. Please go ahead. Thank you for the opportunity. One question is on the capacity side, if you can highlight what Can we expect for the coming quarter in this year, given we are not outlining the guidance in the press Listen, but if you can give some color how are we looking at it, Tafei, if you can. So broadly speaking, we had 65% of pre COVID capacity. That's dictated by the Ministry. That's where we are today. We have solicited a higher level of capacity as have a couple of other airlines. Now just because the capacity is there, we're not going to fly. It's not like the government says, okay, you can go to 100%, we go to 100%. Of course not. So we will be dictated by, again, the breakeven load factors that we see in the market. And the breakeven load factors will be very much driven by the yield, Which again will be very much driven by COVID. So we'd like the government to do away with these caps because we don't think they make sense. It's up to us to decide how much to fly. But once those caps are removed or even relaxed, we will buy judiciously. We're not here to lose money. And therefore, we'll put in capacity slowly and in a measured way so as to make sure we are always above breakeven load factor. Sure. And on the expenses side, the run rate we should look at on the employees and the renters Should be similar to this number, at least on the fixed side. For which period you're talking about? For the upcoming quarters? For the upcoming quarter. Lease costs, roughly the same, I would We get some new airplanes in, we put some old airplanes out and the police cost should remain roughly the same, yes. Sure. And lastly, the timeline of retiring all the new ones will be sorry, CEOs will be December 22, Wolfgang will take that question. On the year's operational? On the year's, when will they look at return? Okay. So CEO will be all returned in about 2 years. As all CEO will be out and We'll get by the view of that. And that's our plan. And there might be some news left, but not very many. And you also see that the lease return, yes, after COVID crisis was there Until end of last quarter, now we see the loan situation stabilizing. MROs have started working again. So it is pretty good that, as Omar has mentioned, will be a catch up situation on the future terms. This also helps us to bring out these costs And again, while we have been slower than planned, we've still been returning the CEOs at quite a good pace. And as we do that, Both our lease costs have come down and our maintenance costs come down, which is another good thing. True, true. That's all for me. Thanks and all the very best. Thank you. More than that. Thank you. The next question is from the line of Joseph George from please go ahead. Hello, good afternoon. Thanks for the opportunity. Am I audible clearly? Yes, you are. Thank you. Perfect. Thank you, Ronald. So I have two questions. The first part of the question was in relation to the capacity guidance. And was when you refer to pre COVID, are you talking about pre COVID domestic capacity or pre COVID overall capacity? No, pre COVID domestic, yes. Thank you for clarifying. International, as we know, there is no vision as to when the whole thing is going to get opened up. So we are talking domestic capacity, absolutely. Sure. And so if your exit rate is going to be at pre COVID, it obviously means that the whole of FY 2023, you expect to be Better than pre COVID in terms of overall capacity. Would that be a right statement to make? Absolutely, absolutely, absolutely. Look, I we have a stable of fuel efficient new aircraft just waiting, okay? I just need the flag to come down. I think Ford is gone and life is coming back to normal. Those airplanes will stick up like a shock. So I'm very anxious to keep adding capacity every chance we get. And by 2023, of course, I mean, I don't think anyone who says 2023, the COVID is still around. Perfect. Thank you. The second question that I had was in relation to your balance sheet. So when I look at the FY 21 balance sheet, the net worth that you had was about INR 1,100,000,000 positive. And with a loss of INR 32,000,000,000 Rupees in 1Q, it's quite obvious that the net worth has turned negative. So in that context, I have two questions. One is, Does this I mean, does a negative net worth impact the terms of your lease agreements, maybe existing or future with respect to the Implied lease rentals because of the perceived risk going up, Is there any such issue to be worried about? None whatsoever. And as we said before, one of the relationships that we And this is very solid, is this Indigo to Lessor to OEM relationships. And we have placed all our Contracts with the lessors go over the number of years. We don't do we don't take these aircraft close in. They are placed well in advance, and we see no softening of that market from our standpoint. Perfect. Thank you. If anything, I think in the lessor's eyes, Indigo has become an even better Risk, if you will, from that standpoint. I mean, just see what's happening around everywhere else and then look at Indigo. And then we just have blue chip in that sense. So our pricing will only improve, Not get worse. Got it. Thank you. Thank you, Ramu. Thank you. The next question is from the line of Ashish Shah from Sachin Brogan. Please go ahead. Mr. Ajith Shah, you may please go ahead with your question. Yes, sorry. Am I audible now? Yes, you are. Thank you. Yes, sorry for the earlier question. Okay. So my first question is that in terms of our lease, are these all Fixed rate leases or variable rate leases, so tomorrow, if the overall boarding rates were to go up, Would our leasing costs also go up? Absolutely not. These are long term contracts. Okay. So they Do not they're not susceptible to the increase. I mean, look at it the other way. When things went up, we didn't reduce the rate. So yes, again, that's the relationship. We are not looking at transaction. We are looking at relationship. Right. Okay. Secondly, there has been a lot of questions around the news. My one point is that when The industry comes and says that we are increasing the floor of the sales by a mixed amount. Does that reflect into the yields that you get in the market? Or somehow while being registered dictates certain terms, But in practice, in commercial terms, you do not see that yield going up in the market. I'll hand the question back to Sanjay Kumar. Obviously, there is a reflection of the fair revision by the DTC In our yields from time to time. As in when the fair sale has been kind of revised before, there has been some kind of impact on the overall yield. But just to kind of capture this, everything is largely dependent on the overall demand environment. And as the demand environment improves, Obviously, it will result in better kind of growth factor as well as revenue situation. So overall, it does affect To some extent, but until the demand environment improves, we will continue to see some pressure on the yield. Results. Thank you. Got it. Sure. Thank you. Thank you for the answers. Thank you. The next question is So just want to understand about the situation with the engines. I think you ordered some of the CSM engines. So what is the status? When are you going to receive it? And what is the kind of have you how are you planning to finance those regions, please? How to finance the engines? Yes. So wait, I mean, this is all part of the lead cost, lead segment that we That's all, right? So we pay the engine manufacturers, but finally, that whole engine and the aircraft goes to the lessor and they pay for the And we paid a monthly rent of And what was the question? I'm not sure I understood your question. Am I did I answer it correctly? No, that's fine. I basically, moreover, I just want to understand what is the status? I mean, when are you going to receive those engines and how that fits In your overall fleet? You're talking about the CFM engine, the LEAP engines coming in? Is that what you're asking? Yes, exactly. Well, the LEAP engine delivery had just started a couple of months ago. And right now, majority of our neos are naturally with W engines. Now the LEAP engine has started, and we expect also to get all the approvals as we have for Prasna On EDCO in the extended range of operations, so it started. And so far, I have to say our experience in LEAP engine was very good. Okay. Excuse me, sir, does that answer your question? Hello? Yes. Yes. So does that answer your question? Yes, that's fine. Sorry, last one, if I may. So for now, how confident are you In terms of reaching back at the February 2021 traffic levels in the quarter through December, Which you were quite confident last time, and you said that you believe that you will reach at that level during the last quarter. Now, of course, the traffic has recovered, but from here on, We are at almost like 160,000 passengers to reach 320,000, sir, just double. How confident are you? Okay. So like I said, it is a very volatile environment. Back in February, I remember how optimistic We were forecasting a profit at some point very close. We were like, oh, so by this month, we should make money, etcetera. Then the bottom fell out with COVID-two. And May, the numbers were so bad, it's like, oh my god, can it go any lower than this? It was that bad. Okay. Then we get these periods of improvement, stall, improvement. Now what happens to the what causes this improvement in stall? It's really driven by the narrative in the marketplace. So when the COVID numbers are down, we get a sudden surge. Then let's talk about Delta variant, U. K. Variant, a 3rd wave is coming, wear double mask, and we immediately see the numbers fall again. So it's very volatile. So anything I tell you, you have to say that it's behind the background is what is happening to COVID. Now assuming COVID behaves And then the 3rd wave comes but is relatively flat because of vaccination. This is our best guess scenario with all the caveats that I've put in there About COVID and 3rd wave and so forth. Our best case scenario is that by December, We should be back to about February and back to almost pre COVID level for domestic only. International will still be slow, But domestic, we should get back to this answer. So we've got a buildup that we're seeing. And obviously, we're projecting it based on what we're seeing in July, what we're seeing in August, What the medical profession is saying about COVID, with all that and with all the caveats and forecasting is a dangerous game in this Very volatile time. But with all those caveats, yes, we think by December, we should be back 100% of pre COVID levels. Perfect. Thank you so much for taking again the question. Thanks. Thank you. Thank you. We take the next question from the line of Chintan Seth from Samit One question, I wanted to understand on the demand coming from Which segment, if you can, whatever demand we are seeing right now, central to metro or we are still seeing more Year 2 travelers picking up your space your capacity parity, yes. So let me touch. What were the different ways that came through on the revenue side? Yes. Immediately after we opened up, It was a metro to non metro and one way traffic. As you know, it was mostly migrant labor, all of that, and it Well advertised in the press, places like Patna, Arashi, so huge spikes, but one way spikes, okay. So that was the first way. Then we saw that slowly becoming a two way spike as people started returning to their work. But metro to metro Also remained weak, not also, metro to metro continued to remain weak. So metro to non metro, our capacity actually went from 47% to 65% because it was strong growth in demand. Whereas metro to metro, we reduced capacity From about 25% to 20% of capacity. However, now with this buildup in revenue, we're seeing metro to metro also coming back. And that makes us feel better because it's more of a balanced growth. It's no longer one way, it's two way to non metro and metro to metro is also coming back. That's interesting. That is all. Thank you. Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference back to the management for closing comments. Okay. So we've all been together now for 4 quarters, Four quarters of very challenging times. And we started by saying that our goal during this pandemic Is to come out stronger than we went in. So the question is we should look at ourselves now and say, are we delivering on that promise? And I will point to the following factors. When we say we're going to be better, better at what? How do you know we are better? Well, let's look at the customer facing issues first. In terms of quality of flying, we've never run a better airline, And we are as good as the best in the world. We're not just staying in India. If you look at our OTP numbers on time, we are the 3rd function in the world. If you look at the customer complaint ratios, they've gone way down, 0.1 versus 1.0 for the rest of the industry. If you look at the NPS, they're way up. So everything from the customer facing said, yes, Indigo has got better. Then look at our underlying structure. In our structure, the 2 most important things are our fleet and our employees. Our fleet is the most fuel efficient we've ever been. We're becoming more fuel efficient with time. We have this wonderful animal called the AC21. We have the XLRs on order. So our fleet is quite a remarkable fleet, I would say. If you look around the world and you can ask yourself, Who has a seat like this that is this young, this fuel efficient and this much growth built into it? Our other pillar, as I said, is complete is employees. So take a temperature of our employees. We've gone through very tough times together. We've taken pay cuts, we've taken layoffs and yet the employee morale is remarkably high. People are engaged, people are enthusiastic, People love Indigo, our employees do. And you can see that in the Great Place TO Work, all this has happened only recently. And then I look around and say, what is happening to each division? So I told each division, I want you to be the best in the industry. IT, you'll be the best IT in the industry. HR, you'll be the best HR in the industry. Even legal, we're the best legal that you can be. And then look what happens. We are among the top 15 in house legal firms in Asia. Look at HR. We keep getting award after award for management of HR. So all of that speaks to, yes, our employee structure is also strong. Then let's look at our brand. We used to be the 53rd most valuable brand. We are now The 32nd, I think, or 33rd most valuable, Brad. And just know that ahead of us are mostly multinationals. It's the Google's and American The Nestle, well, we have a hard time disclosing that. But if you look at Indian brands, we're the 7th most valuable Indian brand. When you look at our market position, every major city, and I'm not stuck on a fixed metro, I'm going down, down, down. Most major cities, we have a remarkable market position. And then we have position in all the smaller towns and cities of the country. And places like Leh, okay, we didn't fly there, now we are flying in the middle of the pandemic, Places like Ijal, places like Bareilly, we are open stations even in the middle of the pandemic. So I look at this list and I say, Is Indigo emerging stronger from the crisis than when we entered? And I say, hell yes. Of course, we lost money, and I'm not promising we'll make money next quarter or anything like that. Short term losses are there. But long term structure, Indigo is emerging much stronger than Indigo went into this crisis. Thank you. Thank you. On behalf of Indico, that concludes today's conference. Thank you all for joining. You may now disconnect your lines.