Earnings Call: Q3 2021

Jan 28, 2021

Evening, ladies and gentlemen, and welcome to Indigo's conference call to discuss the Q3 of Fiscal Year 2021 Financial Results. My name is Raoman, and I will be your coordinator. At this time, the participants are in a listen only mode. A question and answer session will follow today's management discussion. As a reminder, today's conference call is being recorded. I would now like to turn the call over to your moderator, Mr. Ankur Goel, Head of Investor Relations for Indigo. Thank you, and over to you, sir. Yes. Good evening, everyone, and thank you for joining us for the Q3 of fiscal year 2021 earnings call. We have with us our Chief Executive Officer, Ronal Dutta and our Chief Financial Officer, Aditya Pandey, to take you through our performance for the quarter. Ulfghan Prokshavo, 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 construed 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 Today's prepared remarks within an hour, the transcript of the Q and A session will be uploaded subsequently. With this, let me hand over the call to Ronod Gupta. Thank you, Ankur. Good evening, everyone, and thank you for joining us on this call. I hope you're all keeping safe and healthy. We reported a net loss of INR 6,200,000,000 in the December quarter compared to a net gain of INR5 1,000,000,000 in the same period last year. During the quarter, we operated at roughly 70% of our domestic capacity as compared to the same period last year. We have been ramping up our capacity as is being allowed by the government. And during the current month, we operated at around 80% of domestic scheduled departures as compared to the same period last year. International capacity continues to be severely constrained, and we are only operating at around 28% of our international capacity year over year. Overall, during the quarter, we operated at around 60% of our capacity compared to the same period last year. It may be worthwhile to discuss the quarterly trends that we are seeing to assess the strength of the recovery. Our capacity increased from 8,900,000,000 ASKs in the September quarter to 15,300,000,000 ASKs in the December quarter, reflecting more than a 70% increase in sequential capacity. Despite this rapid increase in capacity And despite the fact that these routes haven't fully matured, our load factors improved by 6.9 points and our RASK improved by 1% sequentially. We remain bullish on the demand in the market, particularly as a number of Tier 1 and Tier 2 cities are now exceeding their pre COVID passenger numbers. And we are happy that the market is embracing the added capacity. Overall, The capacity restrictions are still a drag on aircraft utilization. And although the flights that we are operating are contribution positive, We are not able to offset all of this costs. Our losses, excluding foreign exchange impact, have now come down from a peak of INR 27,684,000,000 in the June quarter to INR8124 1,000,000 in the December quarter. We are hopeful that the government sees fit to remove the capacity restrictions in the near future to support the ongoing recovery. Our ancillary business continues to do well. And while our capacity has declined by 40.8% year over year, our ancillary revenues have declined by 22.1%. This performance of our ancillary business can be primarily attributed to cargo operations, which continue to perform well for us. We operated around 1500 cargo charter flights in this quarter, and we have seen a steady increase in total cargo plans carried. Our cost reduction efforts have proved to be invaluable in this revenue challenge time. Despite flying 40.8% lower capacity, our CASK during the quarter remained essentially flat on a year over year basis at INR 3.68, driven by lower fuel prices, our cost reduction efforts, high utilization of the new fleet and positive movement in the value of the rupee. Sequentially, CASK has reduced by almost 20%. In order to increase efficiency and to further improve our CASK performance, We will continue to replace our CEO engines with the NIO engine aircraft in line with the previously stated plans. Our priority remains to provide a safe and hassle free experience on board our lean team flying machines. We introduced a system for self scanning of boarding passes so as to promote contactless travel. The process of providing PP kits, face shields and sanitizers for our customers and enforcement of social distancing norms Continue. Our tireless efforts to provide a safer and more hygienic experience coupled with focus on customer service are paying off. We have gained in customer confidence over the last 6 months because of our safety measures and customer initiatives. I'm happy to report that the NPS continues to improve and our complaint rates are at minimal levels. In particular, I'm pleased to note that we improved markedly in the warmth of our service. Further, an online survey conducted by us during December 2020 revealed that 81% of the travelers are confident that Indigo will ensure clean and safe travel. This is a 16 point improvement as compared to the same survey conducted in June 2020. Our teams have been putting in the best efforts to enhance the customer experience in all possible areas, including our on time performance. For instance, in December, we were ranked 1st with on time performance of 94.7%, 10.8 points above the rest of the industry. For the quarter, our on time performance was 96.6, which is one of the best performance over the last couple of years. I'm pleased to report that we have received several awards during the quarter in the areas of crisis management, health and safety standards, managerial effectiveness and CSR initiatives. Favorable recognition from our stakeholders motivates us to do even further in creating additional value for our brand. Now to give you an update on liquidity. Our operating cash flow has been steadily improving. We exited June with a cash burn of INR 300,000,000 per day and had an average cash burn of INR 250,000,000 per day and 150,000,000 per day in the September December quarters, respectively. Given the recent run up in oil prices and the fact that we are going into a seasonally weak quarter, we cannot state with conviction that the improving trend in cash burn will continue into the current quarter. We would like to hit the seasonally strong Q1 next year with all cylinders running and at full capacity at least domestically. In terms of broad capacity guidance for Q4 of 2021, Subject to government lifting the restriction in capacity, we are hopeful of deploying about 75% to 80% of our 4th quarter fiscal year 2020 capacity. In terms of international capacity, with the exception of air bubble flight arrangements and charters, The low level of international capacity continues to remain a major concern for us and continues to hurt our financials. We are anxious to get back in a big way into the international game. With the advent of the vaccine by major players, We are hopeful that the restrictions on international travel will be lifted. The enthusiasm of our employees has been a major force behind the fast paced recovery. I'm very proud of the way all our employees have displayed dedication and teamwork in the past few months. Let me step back a little and discuss the revenue environment we are seeing in weighted BTS. It is a very volatile environment, and we get a period of strong revenue lasting for about 6 weeks, followed by a period of weak revenue lasting for about 4 weeks. This volatility is partially driven by the fact This capacity is being added because of the full benefit of the longer booking periods that we are historically used to. Through all this volatility, it is encouraging that the volume of bookings have increased steadily, while the yield is gyrating and absorbing the Shocks of additional capacity. Specifically, I can state that the 4 week period starting 15th December has been relatively weak. But again, since 15 January, we are seeing strong momentum. Given this volatile environment, We are unable to provide near term revenue or cash guidance with certainty, but we can state unequivocally that the trend is up. And with that, let me hand over the call to Aditya to discuss the financial performance and further share. Thank you, Ronu, and good evening, everyone. For the quarter ended December 2020, we reported a net loss of INR 6,200,000,000 compared to a profit after tax of INR 5,000,000,000 for the same period last year. We reported an EBITDA of INR 9,900,000,000 compared to an EBITDA of INR 19,600,000,000 during the same period last year. During the quarter, we operated at 59.2% of our year over year capacity. This is in line with our previous guidance of around 60%. The key highlights of our performance during the quarter are: We operated at a load factor of 72%, reduction of 15.6 points on a year over year basis. Our yields reduced by 4 6% year over year to INR 3.70. Further, our RAS reduced by 16.4% to INR 3.27, primarily driven by reduction in our load factors of 15.6 points. Our fuel tax reduced by 42.2% compared to 31.5% reduction in average ATF prices on a year over year basis. Despite a 40.8% reduction in capacity, we were able to hold our increase in CASK ex grew to 22.2% as a result of our cost reduction efforts and helped by favorable trends of rupee. Our employee costs Year over year continued to remain 35.8 percent lower. Our cargo revenues has grown 38.5% on a year over year basis. This has helped us generate much needed liquidity during the crisis. The update on our cash position and liquidity is as follows. We ended the quarter with a free cash of INR 74,400,000,000 and a total cash of INR 183,700,000,000. Our net cash burn per day reduced from INR 250,000,000 per day in the last quarter to an average of INR 150,000,000 per day in this December quarter. This was helped primarily by net contributions from operations, which nearly doubled quarter over quarter. Out of the INR33,000,000,000 Out of the INR 72,000,000,000 balance of additional liquidity we had targeted at the end of September quarter, we were able to raise INR 21,000,000,000 during the quarter and the remaining is expected to be realized in the next quarter. Further, we also have several options of debt financing available with us In case there is a need in future and our ongoing deliveries of neos in FY 2022 will continue to provide us with additional liquidity. In light of gradual recovery, we believe that our internal sources of cash will be self sufficient for our operations and thus we have decided not to raise funds to the QIC. On the other key balance sheet numbers, we ended the quarter with capitalized operating lease liability of INR 245,600,000 and total debt, including the capitalized operating lease liability of INR277,300,000,000. We are consistently working hard to increase capacity, optimized costs and enhanced liquidity, and we are eager to be back on the path of growth. With this, let me hand it over back to Ankit. Thank you, Rongu and Aditya. 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're ready for the Q and A. Thank you very much. We will now begin the question and answer The first question is from the line of Arvind Sharma from Citigroup. Please go ahead. Good evening, sir. Just a small question on the accounting part. We've seen a decent ForEx gain in the quarter, could you please explain because normally when we have rupee Shifting versus dollar even at closing rate, we normally tend to have a ForEx loss. But is there something that I'm missing over here? Yes. So ForEx losses are calculated on Quarter end points. So at quarter end last year, last quarter, you were at INR 73.69 to the rupee, It has now come down to MXN 73.07. So therefore, we actually made a gain of MXN 62 and therefore, you're seeing a mark to market positive impact for us. Got it. The points are quarter exactly quarter endpoints. That's how as per accounting, you have to calculate the mark to market gains and losses. The next question is from the line of Ashish Shah from Centrum Broking. Please proceed. Yes. Thank you. So first question is that we are expecting to ramp up the domestic capacity further from here. But the passenger traffic numbers that we see over the last month or so have been Sort of crawling just a bit inching up marginally. So you think the market is ready to absorb this sort of increase in Asity from our side as well as I'm saying from the other players as well? Yes, Asity. So as we said, it's a volatile environment. And let me tell you, In November 1st week of December, the demand was really strong, and we were quite excited and optimistic about what was coming. Unfortunately, the second half of December and running into January, the demand has become weaker. And it is It's certainly coincidental with sort of the UK mutation panic that sort of seemed to have taken over the market to some extent. So like I said, it's and then again in the second half of January, all those effects have gone away and we've seen strong bookings. So it really is very news flow dependent. If the market is quiet, there's no big news coming, then the revenue is strong. So absent any another big South African mutation or something, yes, we are quite optimistic that the market will absorb the additional capacity. So we've been talking to the government, of course, on this. And we are urging them to take up to 100% of capacity as quickly as possible. And we are very confident that, that would be a good thing both for Indigo, of course, and for the country in general. Sure. So secondly, on the yield part, obviously, we know the yield for the Q3 as such. But if you could broadly split how individual months were October, November December was. December a significant Sort of a reversal or weakened month as compared to what we might have seen in October, November or the yield was uniformly For the entire quarter, uniform for the entire quarter? The yield followed that pattern that we've talked about. If we look only at November, we were very happy with the result. It was very good. First, December also started up well. And then we had a period of 4 weeks, which we were Disappointed with the yield. But again, in the last 10 days of January, it seems to be coming back. Sure. Got it. Thank you very much, sir. Volumes have been strong all along, by the way. We've never had a problem with volumes. Right. I'll come back if I have more questions. Thank you. The next question is from the line of Sonal Gupta from UBS. Please go ahead. Yes. Hi. Thank you for taking my question. Good evening, everyone. And just following up on that question, I mean, I'm just Trying to understand, like you mentioned a couple of times that you are eager to get to 100% capacity deployment. So Do we see that I mean is that the first objective and then we look at how the yields should shape up or the profitability should shape up? I mean like is that the First objective in the sense that full capacity would help you in terms of fixed cost absorption. Is that I mean, how to think about it because I'm Just trying to understand from a profitability standpoint, like you're guiding that Q4 will not be I mean, you cannot assure that Q4 will see further Cash burn reduction, so can you just explain? So several pieces to this. First of all, Q4 is a seasonally weak quarter. So we're saying all right. We've had sequential improvement year over year, quarter over quarter and into a strong seasonal quarter. But I mean, ahead of us is this Q4 with the seasonally weak. That is one thing. To the issue of capacity, how do we think of additional capacity? Clearly, we want aircraft utilization to be high because that's what drives CASK. So additional capacity helps CASK. Now that would not be a good thing if revenue couldn't keep up with additional capacity. But we are very confident that revenue will and is keeping up. Part of the problem is that we are not getting enough of a 8 week booking period, if you will, in adding the capacity. So we want to start adding the capacity now, open up for the summer schedule, start taking the bookings and we are quite confident that the Revenue will also come. So adding capacity helps us in 2 ways. It reduces CASK and the revenue as you've seen quarter over quarter, The yields are holding up, not year over year, but on a quarter over quarter basis, we are doing better and more effective than you. Sir, but if I could follow-up on that, basically, I mean like typically, I mean Q2 is anyway a seasonally bad quarter anyway. This Q2 is not really much of a comparison, but and you do see it is actually strengthening quarter on quarter, which has not been the I have a significantly quarter on quarter and which has not been a trend this time around. I understand the environment is very volatile at this point. But despite the fact that we are deploying additional capacity and the load factors have actually gone up, we're still seeing a decline in yield. So that's So what I'm trying to Like I said, the declining yield is mostly factored around this mid December to mid January Yes, which is because of we think because of the UK mutation fear. Going forward, we think that the revenue will be strong, especially the Q1 of next year. And that's why we're anxious to put the capacity in place for that. Right. Okay, great. Thank you so much. I'll join back. Are you satisfied with the answer? I see some I think you still have a lingering question in your No. So my question is probably may not be really short term, but I just want to understand like I mean from a longer term perspective, I mean do we have EBITDA range or something where we would ideally want to operate that? I mean like is there a profitability Target that we have rather than just capacity deployment? No. Look, we want to get back into the green as per the year possible, Okay. We cannot get back into the green without good aircraft utilization. So if we follow that logic, We want to be profitable. We need aircraft utilization. We need more capacity. Now the countervailing force where you might have some question is, All this is good on the cost side. Is this also good on the revenue side? And the answer is yes. The revenue is at least holding up well with the new Okay. And with the period of booking curve advantage, meaning the flights are open for 2 months before we actually fly them, The revenue looks even stronger. So we look at revenue on flights that have operated for 2 months, flights that have operated for 4 months and flights that have And it's the flights that have just been started that are dragging us down. And that's why we want to get ahead of the curve and open up more and more flights. Cost will come down efficiently. Revenue will hold up well is our formula for success. Right. And just on that I mean, like the government still has these basic minimum fares on each all the most of the main rules. So does is that not remunerative enough in that sense, I mean like the minimum fares? Look, the fares are lower than they should be at this Fine. And again, it is because we're not getting enough of our booking period. All the bookings are happening very close and It's too short a period for us to have good load factor and good yield management. Eel management doesn't work if you're applying at 70%, 72% load factor, right? You need Higher load factors will do better with yield management. Okay, sir. Great. Thank you so much for answering the question. Thank you. Thank you. The next question is from the line of Deepika Mundra from JPMorgan. Please go ahead. Hi. Thank you so much for the opportunity. A couple of questions. So what's your revised employee cost guidance given that you're scaling back to full operations? And secondly, when you mentioned on the yield improvement from Jan 15 onwards, could you clarify That's just sequential compared to the weakness seen in this quarter or on a year on year basis? I'll answer the employee question. So we as we had guided, we'll be 30% lower than our in pre COVID levels of cost. So we continue to hold on to that, and we think we'll be able to achieve that by the end of the year. So we're sticking to our guidance on implied costs. So 2 year yield, and I will combine yield and load factor into a RASK discussion. So we saw very good RASK in November. We saw good RASK 1st few days of December. Then we saw a decline in RASK. And I can't I'm not going to give you absolute numbers, of course. I can only talk trends. We saw a decline in RASK in December, below that of November. And then the last 10 days of January, RASK has been picking up again. And more importantly, our bookings are picking up. And bookings are obviously a predictor of what's going to happen in February. So that's why we are saying, the troughs and the valleys, We seem to be going up now, up this road at this time. Okay, sir. Understood. And first, if I may just follow-up, How sustainable is the trend in cargo from here as well? Well, cargo So cargo is a mixed bag in the sense we've had steadily improving a trend, right, through the entire period. But going forward, as more and more capacity comes in, we don't think it's sustainable in the long run, in the sense that this is the charter cargo it's going Chartered cargo, we're still seeing opportunities internationally, which we're picking up on. But domestically, obviously, more and more of the charter cargo is going So the valley of the scheduled flights. As a result, there is a little bit of pressure on the cargo yield as well. So cargo has surprised us on the plus side, but we don't think it's sustainable long term. Understood. Thank you so much. Thank you. The next question is from the line of Aditya Makariah from HDFC Bank. Please go ahead. Yes. So this is Aditya from HDFC Securities. You mentioned about yields obviously being volatile. And so far, we had the benefit of crude prices being really benign. They were around $30 give or take. Now obviously, this quarter onwards, they are moving up to 55,000,000 basically across the half century mark, so to say. So I mean how should we look at profitability in this slide? So clearly there is pressure on profitability from crude. There's no question. It's a mix of factors, right? We have to get our cash down. We have to get our revenue stable throughout. Again, our first priority should be in getting the CASK down to higher utilized rates. That's something I mean, we think that is the first step in the path to profitability. After that, we have to manage revenues. And if it wasn't for this December 15 January 15 period, You would have seen us being far more optimistic about revenue. If we were talking in the 1st few weeks of November, we would have said, hey, revenue looks great. But Fortunately, again, we seem to be doing this or turn back. And I think it's related, as I said, to news flow. Is the vaccine effective? Is there a South African mutation? Is there a UK mutation? To the extent the news flow is good, we see the revenue following that path. Right. Okay. And how are your fleet expansions? So we are 287 claims now, how does this look in year end and for next year? So as we've said before, Next year, our fleet count will be down marginally, but our capacity guidance is still up in some of these cases because we have more seats per airplane. So we're getting bigger seats bigger headwinds like this, A321. So our capacity year over year will be up slightly. Okay. Single digits is what you're guiding. We've not given a guidance, but capacity would definitely be up. Okay. Thanks. Thank you. The next question is from the line of Shankur from HDFC Life. Please go ahead. Yes. Hi. This is Ankur from HDFC Life Insurance. So thank you for your time. Couple of questions. So one, we always believe that post COVID, the competitive scenario would be a little bit more rational given the balance sheets of a lot of players in the industry. But clearly, again, we've seen these large discounts being announced Probably incidentally, the peak travel April to September. So what's your view on fares? So slightly longer term over the next 2, 3 quarters, how do you see fares and therefore ease kind of panning out? So okay, you started off by talking about some capacity consolidation. We don't see that happening at this point. I mean, everyone's flying capacity is just you read the papers like we do. 1 of our competitors is getting more airplanes, So I don't think there's a capacity reduction that we are talking about. We see that overall, the Revenue environment is reasonable. Clearly, all the fuel prices have gone up. They're Still down from where they were, so we have some cost advantages. We have taken our costs out, so internally. So to the extent we are able to get back to 100% capacity utilization, we should see a pretty significant improvement in our cash position. So that is something we can manage, that's something we can control and that's what we're trying to do. Revenue environment obviously is not within our control. But again, we are encouraged by the depth and breadth of our network, the advantages of our product. So we are seeing improvements in that context, especially connecting traffic, for example. We've got so much Traffic in so many different cities coming into Hyderabad, Bangalore, Delhi, etcetera, that we think we get a very good advantage on the connecting side. Inside. Because of our product, we think we get good advantage in terms of group travel, in terms of charter inquiry. And so Things that we can control, we are controlling very well. Now we can't quite control what happens in the revenue environment. But again, hopefully, with It should improve over time. So looking forward to 2022, and I know that we're taking not 3 quarters, look, but a year, look. We are very optimistic that, look, international will be open and everything we talk to the government, they also By April, May, June, yes, internally start opening up. So when we go look at year ahead, we are very, very bullish in what's going to happen. Our costs will be under control And our revenue will be strong. Fair. Okay. That's very helpful. So secondly, we're adding Close to about 10 old NIO planes every quarter, maybe add about 40 annually. While the Leasing retired, I'm assuming end of lease life. So how much of debt gets added on our books, As in in terms of the capitalized lease liabilities, so it's visiting at about 28,000, 29,000 total debt. How much is that increased by So while the overall fleet remains the same, I would assume that the overall reliability actually goes up? Yes. So you were seeing this addition, But we're also in the process of returning some of our old planes. So net aircraft headcount, as Bruno mentioned earlier, will roughly remain the same, slightly down actually. But capacity would be up. But whatever we're adding are newer planes right now. So you will see capitalized costs therefore going up in proportion to the retirees and what we're taking in as new planes. But remember, all of these planes also come with a very big advantage on Economy as well as on overall cost economics. So while on the capitalized side, you will see capitalization for these going up, but you will see overall costs From the operations of these trains being much finer than they are today. Right. Okay. Okay. And just one last one, if I may. If you could share the passenger volume numbers, both domestic and international, for this quarter, if it's there with you? I think if you can get in touch with Ankur and the IR team, I think we can get you on the details. Yes. Okay. Thank you so much. That's all. Thank you. The next question is from the line of Amit Shah from BNP Paribas. Please go ahead. Hi, guys. Thanks for the opportunity. Just one two quick questions actually. One more big picture So you know you gained market share during the COVID period, right? And assuming in the next 3 to 6 months things normalize, how much of that market share gain you think you can retain? Let me say this. First of all, we are not focused on market We are focused on ambition, which is to connect as many cities as possible across the country and with as much high frequency as we can. Now will that result in a higher share? Probably, but that's a side effect of what So let's talk about the major mission that we are trying to embark on. As you've seen, we've opened we've announced opening of 7 new domestic And on top of that, we are adding frequency. As we do all that, you would expect our customer numbers to go up, yes. Okay. And just one housekeeping question. What was the cash burn for this quarter? Yes. So it was it, INR 150 INR 15 INR 15 INR 15 INR 15 INR 15 INR 15 INR. Okay. Thank you so much. Thank you. The next question is from the line of Achal Kumar from HSBC. Please go ahead. Yes. Hi, gentlemen, thank you for the opportunity. So going back to the yield question, Of course, the yield has been soft. The sales had been down. So what I want to understand is that Although the traffic has reached 55% versus last year in December, and as you said, the environment is being mixed, In your understanding, how much of the traffic could be because of the low fares and then probably shifting from trains to planes? And how much is according to you, could be the underlying traffic growth? And related to this, last quarter, you said that You can still survive with the train traffic, but now with the fuel higher fuel price, do you think you can survive with the train traffic? And if not, What would be your strategy? So Indigo very much believes in affordable fares. So we are not pushing nor we're going to migrate into a high kind of environment at all. Now the fare environment we are in now is a little too low to be economic. So inevitably, it will tend to drift up. But it's not going to get much higher. So again, if average fares are around 3,500, yes, it might go up to 3,900, 4,000 And that would be fine with us. At those levels, I think we can be profitable as long as we are flying our full In terms of capacity utilization. To the train fare, obviously, again, we are at 3,100, we are almost at A slight premium is something we deserve. And even given the long distances that we're talking about, it's not just Delhi, Mumbai, we're talking Gauti, I think we can be we can afford to be at a premium. I can only tell you this that we are seeing growth In a very nice distributed comprehensive fashion. It's before it used to be and before I go back 2 years, It used to be metro to metro traffic. Now it's not. Places that never used to have such strong demand in what are generally thought of as economically undeveloped areas are showing very strong demand. So we think this transition From train to air travel is happening in particularly big volumes. And it won't be subdued just because the fares go up another 5%. The underlying trend is much more long term, much more macro Then Ming, this is clearly price driven. And then and how about the growth in terms of what kind of growth In your opinion, would be the underlying growth and how much would be the how much of the traffic growth you noticed in December would be because of the low fares? So again, I obviously can't answer your question Specifically, but you can say, okay, what happens 12 months from now? You need to take a longer view of this because the short term is So clouded by the news flow. But if you go out 12 months from now, we see lot more room for growth, particularly in Tier 2, Tier 3 kind of cities. And as a result and those are not going to be affected by little fare changes. They'll be affected by COVID, no question. But we are hoping a year from now that always the issue will also get subdued completely. Okay. Secondly, on the international side, so international still remain uncertain and especially with The current situation in Europe and across Europe and in the other part of the world, international Seems like it still remains uncertain. And even if the international boundaries opens up, the demand could remain uncertain. I remember you talking about your international operations contributed almost 25% of the total revenue. And now with international is no more there or probably it's highly uncertain, How do you think you would be able to offset the loss from the international side of the business? So We are hopeful that international will start opening up soon. As we said, we are doing 28% of international capacity compared to year over year. There are a couple of key markets that were almost going to open but were held back because of this UK mutation. Examples would be Saudi Arabia, Sri Lanka. Government to government discussions were going on, and we were on the cusp of being allowed to fly there. Because of this COVID UK issue, it has been held back. But everything all indications from the Ministry are Is that okay? In another 6 weeks, 8 weeks, all those markets will be back. Now I don't know what will happen to U. K. Or U. S, but the markets around us that are important to us, Sri Lanka, Saudi Arabia, Bangladesh, all of these places, I think I'm fairly confident by April, we'll be back. So in our markets, again, our goal is let's get back to 100% of domestic capacity by April, Let's get back to about 50% of international capacity by mid next year and 100% of international capacity by the end of calendar year 'twenty two 2021. And the last question, if I may. I'm sorry. If did you get a chance or did you speak to your corporates? And what kind of response are you getting? I mean, When do we expect corporate traffic to come back to the planes? And how much of the corporate traffic do you think could vanish on the permanent basis because of the Usage of technology like Zoom and all. So if you could please help on that? Sanjay Kumar is obviously very close to this subject. I'll let him answer in that question. As far as the corporate traffic is concerned, we are seeing very positive response on various corporate houses whom we have been interacting with. And especially now after the event of last year closure, this long holiday season of December, We are getting a sense that lot of corporates are now beginning to travel. Just to give you example, we have seen some kind of growth in the SME sector And some of the industries like pharma, auto, infra, construction and other core sectors of the industry have started getting back with about 25%, 30% of the travel on the official purpose. What is not right now working is the IT and the Consulting sector, which are still taking some time, but we hope that by the end of the quarter 4, I think April 1, they will also Come back to flying. So as a result, we are hoping that corporate travel will also come back in the beginning of the next year, I mean, for quarter 1 to about 70%, 80%, if not more. Thank you. Before we take the next question, a reminder to participants to please limit your questions to 2 per participant. We take the next question from the line of Kalpith Narvekar from Alliance Global Investors. Please go ahead. Hello. Hi, sir. Thanks for taking my questions. So I have two questions. Firstly, so from the fleet breakup, it Seems like the return rates of CEOs have like you just hit on 6 CEOs this year. But I remember Wolfgang talking in one of the earlier earnings call about the return rates picking up. So I guess that has a positive impact on your CASK as well. So do you think that will pick up the return rates in the next quarter or next And to what run rate on a quarterly basis? Wolfgang is here to answer your question. Yes, hello. Yes. I mean, our goal remains unchanged, as I have elaborated last time or maybe one conference call before that. Maybe we get A lot of aircrafts in, but we want to balance it out in getting more or less equal number of aircraft out of the older generation. So our goal is basically We should come out of this crisis with a much younger fleet, much more efficient fleet and not creating any overcapacity, and that's what we are working on. And this is a huge task, as you can imagine, but we have been very successful in getting all the aircraft out. We will turn it back to the lessors. And I also want to mention that It would not be a wrong impression that it's prematurely terminating a lease. No, it's when the lease comes to an end, We undertake all the work so that we can return the aircraft exactly on time or There's a slight delay, maybe sometimes because of the COVID situation, but returned more or less in sync with the lease expiry dates to the lessors. That's what is our goal, come out stronger with a much more efficient fleet. Okay. But any kind of Number that you're looking at on a quarterly basis? So clearly so let me try and answer, Pallant. So clearly, our real live is an increase Then what we've seen in Q1, Q2 and Q3 as we go forward in Q4 and Q1 next year as well. And we are still on track to return 100 pings as we said By December 2022. Okay, okay, okay. That's helpful. And secondly, so my second question is on the competitive side. There's I mean, there's news of One more player coming in and there's also consolidation talks in the year. So how do you think like capacity addition might happen on the competitor side as well? So how do you see that impacting the yield going forward? Do you think yields would hold up and say not going forward in, say, 1 or 2 quarters, but say, 12, 18 months down the line? I don't see much room for a sudden jump in capacity from the competitors. I don't think the fleet is there. So whatever fleet is being unused, yes, some of it will come back. But there's no new net sales coming into Some other than Indigo. So I think it will be a very tempered growth. So yes, I'm not too concerned about Competitive capacity is only coming up. If you're talking about Jet Airways or something like that, revival, those are years away, at least months away. Yes. Go ahead, Wolfgang. If I can add here, I mean, we have the big advantage that our fleet we operate are ready for operation is completely reconfigured, Whatever it is, engines, everything, everything is flyable. So whenever the capacity is opened, We are ready to fly. We have the resources also on pilot side. So and we have a situation when you go around in airports in India, We find this quite a number of aircraft not flying for several reasons, not in our case, but with others. So that's why we also share the view that And increasing capacity by other airlines will be very muted, to put it that way. Thank you. The next question is from the line of Christopher Zhao from RWC Partners. Please go ahead. Hi. Thanks so much for the timing and the color. I just have one question regarding the demand trends and where we see traffic returning with respect to the routes Between, say, metro to metro, metro to non metro and also non metro to non metro. I'm just wondering, I mean, whether it's the news a reflection of how the routes have reopened? Thank you. Yes. So as I think we said this in the last call and it's Through this call as well. Metro to metro is really one of the weakest sectors. It used to be one of our most profitable sectors. That's not true right now. And nonmetros are doing better. So metro to nonmetros is where we see the most growth, the most profitability, the better That's the deal. And that's why it gives us more confidence, if you will, because metro to metro, Promising and profitable as they were, you're still limited to 6 metro. Whereas once you go into non metro, there's so many of them. And we see all of them doing well. And before, there was a period when it was all in the South or in the West. There's a lot of markets in the East, And I'm sure you've seen this in everywhere, in all other segments as well. So the Eastern UP, Bihar, Satyagraha, These are not traditionally known as strong markets, but we see them as strong markets right now and that gives us a lot of hope. So it's a very much more of a distributed pattern And many more cities participating. So that we are not sort of held hostage to Bangalore, Hyderabad, Chennai has to do well and then the airline A lot of smaller cities are really performing very promising in the volume growth. The next question is from the line of Dinesh Singh from Morgan Stanley. Please go ahead. Hi, team. Thanks for the opportunity. Just Hi, Gmel. Hello, this is Deta. So my first question is on the cost rate side. Could you share some numbers as to What was the percentage of mix corporates were at the peak? How is that came in between December quarter and what you are seeing today? And secondly, could you also share more utilization hours per day at the peak? And how many hours per day are we So let me try this. Business travel pre COVID was about 22% of our revenues. It went down to about 8% of our revenues. And our best guess, as Sanjay was saying, will probably stabilize at about 15%, 16%. That is what we suspect is going to happen. As far as aircraft utilization is concerned, as we said repeatedly, it's very critical for us to get that aircraft utilization up without which we see very little hope of getting to profitability. So we're very focused on that. Aircraft utilization, rough numbers, as I recall, used to be around 13. It's right now, we are close to 7, 6.8 or somewhere in that range. And again, we need to get to about 10, 11 as quickly as we can. So have I answered your two questions? Yes, yes. Thanks a lot. Thank you. The next question is from the line of Chokalangam Narayan from BNP Paribas Mutual Fund. Please go ahead. Yes. Hi. Thanks for the opportunity. So one, quite interesting that you kind of talk about No, the capacity mix being slightly more towards the larger fleet. Nishantal, we can't hear you very clearly. Request you to use the handset if you are Is this clear? Yes, much better. Please go ahead. Yes. So it is quite interesting that you kind of talked about the capacity coming up would be a lot more larger fleet. But meanwhile, the city pairs or the trunk routes, The metro pads are not really firing. So one would have ideally thought connectivity from Tier 1 to Tier 2 or Tier 3 cities. Ideally, ATR would have made sense as a fleet path. Do you actually get more utilization on a larger Blaine, even on a shorter stage length, how should we think about that? So our fleet plan was obviously Set in stone a long time back, and we can't sort of adjust to it. So AC21, Part of the reason our load factor is lower is because we have more A321s in the mix. And if we didn't have A321s, if we just had 2020, our load factor if this quarter at 72 would have been up higher by a couple of percentage points. To the issue of do these markets make sense, Look, there are some markets which are clearly ATR markets. And we've announced a slew of, say, 7 new stations that you saw. And half of those will be ATR, half of those will be AT2020. Now get enough of the Tier 2 cities which demand more seats. So I'm sure you'd have seen this in the press. Cities like Chandigarh, cities like Srinagarh, cities like Patna, They are way above the pre COVID level. So it's not like everyone is hurting. As I said, metro to metro capacity is hurting, volumes are But many Tier 2, Tier 3 cities are doing exceptionally well. And yet, there we need seats, not just ATR seats, we need Airbus seats. You'll appreciate, Patna and Sandeepar, those are not ATR markets. Equally, though, we are announcing places like Darganga and so on, Which will be ATR. So it is a mix, and we are lucky and fortunate to have the right fleet at our disposal. The ATR market we gladly have the ATRs because many of these markets only work for ATRs. But equally, we are delighted we have the AC21s because they take the Where we need the volume, the H21s are there. And especially as load factors improve, the A321 will become even more valuable. Sure. The other one was because of the disruption that's happened because COVID, has there been any sort of government to government kind of talks where the bilaterals are kind of finally changing and The Indian carriers are starting to get a better share of the break wherever it's operational or you think there can be a reset to Entire thing? There is continuous government government contact. We ask for abuse from time to time, but the ministry will announce when they have But is the conversation going on continuously? The answer is yes. But any particular key feeder markets where you've seen the Pendulum kind of moved or rather the needle kind of moving? Moving in what sense? In terms of better deals for India? Yes, yes, Indian carriers? Too early to say. I mean, the government is obviously trying its best to get there, but we don't we are not in a position to say whether we're successful. The government will announce Sure. Thank you. Thanks a lot for the opportunity. Thank you. Thank you. The next question is from the line of Varun Ginolya from Ambit Capital, please go ahead. My question is a follow-up on Ankur's question on lead liabilities going up as higher capacity planes come in into the mix. I was thinking whether there can be an offset to that trend in the form of higher discounts that you would get from OEMs and lessors, given you are taking deliveries during times that we are in right now And getting higher discounts than what you used to get pre COVID. So will that kind of offset the higher lease rentals on those Higher capacity gains, will that be an offset? That's my question. Look, our relationship with OEMs and our vessels are very important to us. And we have continuously dialogue going on, but I can't give you, oh, yes, we're doing better, We're squeezing more out of them now. I can't make that statement nor do we want to comment on that relationship, frankly. We hold that pretty sacred, if you will. Okay. Okay. No worries. That's it from my end. Thank you. Thank you. Okay. Can I just jump in here, guys? I feel like there were a number of questions So how is this thing supposed to work? I mean, ultimately, we all want to get back to Obviously, it's an uncertain environment and people are justifiably asking, is this going to work out? So our strategy is fairly simple and I think very much grounded in the reality of what we think. Our strategy is Get the domestic up to 100% capacity as quickly as you can and just grounded in the reality of, Yes, the demand is there. The demand is not going up in a straight line. It is hiking up and cycling down as the news flow comes in, but the trend is up. And the trend is up in a very healthy distributed way, not complying to a couple of markets, but it's like happening everywhere. In the deep south, in the deep east, in the deep north, all this Sinagar, Chandigarh, these cities are doing really well as Patna, Varanasi, etcetera. So you see a very distributed pattern. So we are very convinced that domestic 100% capacity is the right thing to do And it will work. International, we have to work through the ministry. And the ministry and us are on the same page. Let's open up internationally gradually, just like they opened up domestic, which I think was a good thing, by the way. I have to give credit to the ministry. We opened it up gradually in a very measured way. International needs to open up in a measured way. But international has to focus country by country. And clearly, the key countries right now are Saudi Arabia and Sri Lanka and Bangladesh and Nepal and a few countries like that. Let me get some more capacity in there. So that by the middle of I'm talking calendar year now. Middle of calendar year 2021, we had 50% capacity And end of calendar year, we're at 100% capacity. So that is the path to success that we're seeing. 100% capacity, get the cash down, hold the revenue at least flat while you're adding the capacity and then get the revenue up as you move into Infernana as well. So it's a strategy that we are very confident about because we are seeing it working. When we started in May, we didn't know what the hell is going to happen, What strategy works? We are not debating from that strategy. That strategy is working. We need to be patient with it, give it a couple more quarters, And we are very confident that we are on the right track. Okay, back to questions, sorry. We'll be able to take one last question. We take the last question from the line of Pulkit Patni from Goldman Sachs. Please go ahead. Sure. Thanks a lot for taking my question. This question is for Adithya. Adithya, in the previous call, both the calls you've spoken about What are the various effort of monetization that we have done with the math of what has been the total cash burn and how much we have monetized. Could you talk about that number for the 9 months, please? Yes, sure. So we did Overall for 9 months, about 5,400 of liquidity that we were able to in the 9 month period. And as we said, we'll do 66 for the full year. That was the goal we'd given out last time. And we're confident of doing the 12 in this current quarter as well. So as we promised or as we guided at a So, 600 crores number for liquidity, we'll be able to achieve that. So 9 month period is INR 5,400 crores. Got it. Thank you. That's useful. That's it from my side. Thank you very much. We'll take that as the last question. All right, everyone. Thank you for joining us on the call. Thank you. Thank you. Indigao, that concludes this conference call. Thank you for joining us. Ladies and gentlemen, you may now disconnect your lines.