Interglobe Aviation Ltd
NSE:INDIGO
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Interglobe Aviation Ltd
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Thus, things are looking better on the revenue side, but the increase in input costs are caused for concern. Looking back, we have had several quarters of unacceptable losses, which have dented our balance sheet. It is now time for repair and healing. But I want to take this opportunity to thank our employees for running a quality airline, paying attention to the customer and for being nimble in generating nontraditional sources of revenue such as cargo and passenger charters. Now that it looks like we are finally emerging out of the COVID crisis, we are turning our attention back to the 2 key principles of our business model, namely, continue to keep our costs down and grow rapidly. To summarize, revenues are fast returning to normalcy. Fuel prices are worrisome. We need a rapid return to profitability in order to strengthen our balance sheet, and we are excited about the growth opportunities that lie ahead of us. With this, let me hand over the call to our CFO, Jiten Chopra.
Thank you, Rono, and good evening, everyone. For the quarter ended September 2021, we reported a net loss of INR 14.4 billion compared to a net loss of INR 31.7 billion for the quarter ended June '21 and a net loss of INR 11.9 billion for the September quarter last year. We reported a positive EBITDAR of INR 3.4 billion compared to a negative EBITDAR of INR 13.6 billion in the quarter ended June '21 and a positive EBITDAR of INR 4.1 billion for the September quarter last year. In the September quarter, we operated at 61% of a pre-COVID capacity as compared to 44% in the June quarter. This higher capacity deployment has helped improve our performance metrics. Some of the key measures for the September quarter as compared to June quarter are: we operated at a load factor of 71.1%, an increase of 12.4 points; we had a yield of INR 4.19, an increase of 20.4%; and a RASK of INR 3.6, an increase of 32.1%. Our RASK ex-fuel reduced by 27.3%, primarily due to increase in capacity deployed and positive impact of foreign exchange movement. We were though negatively impacted on the fuel cost as our fuel CASK increased by 16.2% compared to the June quarter. Due to the improved revenue environment, our average cash burn per day reduced by around 39% in the September quarter. Further, we ended the quarter with a free cash of INR 63.5 billion, a net increase of INR 7.3 billion as compared to June quarter. On the other key balance sheet numbers, we ended the quarter with a total debt of INR 323.4 billion, including capitalized operating lease liability of INR 275.6 billion. With the impact of second wave abating an additional capacity deployment, we are likely to show an improving trend in all our performance matrices in the forthcoming quarters. We continue to focus on keeping our costs under control and providing world-class services to our customer. With this, let me hand it back to Richa.
Thank you, Rono and Jiten. [Operator Instructions] And with that, we are ready for the Q&A.
[Operator Instructions] First question is from the line of Deepika Mundra from JPMorgan.
So just a couple of questions. Firstly, regarding the yield, what is the key driver for the increase in the quarter? Is it just a fair cap? Or is it something else which can potentially be more sustainable? And you mentioned about the path to profitability despite the higher cost structure. Again, can you talk about a little bit of that as to how you plan to get there?
Okay. So first on the yields. There clearly is some pent-up demand that is obvious, particularly in international market. As each market opens up, whether it's Oman or Kuwait or Dubai, every market that opens up, there's a huge surge of demand, if you will, and prices are high as a result. Fortunately, they're not also declining rapidly. They start off high, they come down a little bit, but they continue to remain at pretty attractive levels. The same is true domestically, and we are pretty pleased with the pricing performance. Internationally, of course, it's not a pricing cap issue. On domestic, the pricing cap that the government puts in place, I'm sure has some impact. But remember, against that, fuel prices are really up. So I think the investor has been fairly responsible, being conscious of the cost pressures that the higher fuel raises in not being -- in packing responsibly. So your question is, is it sustainable. Yes, I think it is. Now to the second question of what is the return to profitability. Clearly, we have to work on the revenue front and the cost front. The best thing that can happen on the cost front is to put more and more capacity into the market in a responsible fashion. And we are pleased that the aircraft utilization continues to march upwards week-over-week as we add more and more capacity. As you know, the government has not -- has removed all capacity caps domestically. Internationally, we are hopeful that more bubble arrangements will be signed with places like Singapore, Saudi Arabia, Malaysia, these all seem to be negotiations in progress. And as that happens, we'll benefit both on the revenue front and on the cost front. So yes, I do believe that we are going to keep improving our profitability quarter-over-quarter, that's what we can forecast.
And sir, if I can just follow-up on that on -- since you mentioned international, the 40% growth on quarter-over-quarter, that's what we can forecast. And sir, if I can just follow-up on that on -- since you mentioned international, the 40% growth on ASKs, could you give us rough split as to what would be domestic versus international?
I don't -- we don't have that break up handy right now. But let me tell you, roughly, we had 1/3 of our pre-COVID capacity internationally and about 85% to 90% of our domestic capacity. So on a weighted average basis, our capacity is down 20% from pre-COVID levels. Unfortunately, I don't have the break up of domestic versus internationally. But you can approach Richa,, and she'd be happy to share that with you.
Definitely.
The next question is from the line of Binay Singh from Morgan Stanley.
First question is that when we're looking at October, there the business is just down 20% versus pre-COVID capacity and the yields are holding quite well. How close are you to cash breakeven now?
So I'll just repeat that looking at October where you are close to 80% of pre-COVID level, how close are you to cash breakeven now? That's the first question. And secondly, any comments on corporate travel. Are you starting to see any pickup over there?
Okay. So cash, I won't be able to give you a forecast. Let's -- I mean, I think, you didn't talk about a cash number, burn numbers coming down, when does it go back to profitability. Let's talk about on a P&L basis. What do we think is going to happen? As I said, I think, quarter-over-quarter, we will significantly improve. Fortunately, as you know, November, December are very strong months. But equally, unfortunately, the following quarter, February, March tends to taper off a little. So I think we'll be skirting with profitability somewhere in there, but exactly when that happens, it's too early to say. Your second question was corporate travel. I'll let Sanjay Kumar answer that.
So we have seen almost 50% recovery of the corporate travel compared to the pre-COVID levels of January 2020. And what we are seeing and getting the feedback on the market is post Deepavali more corporates are going to kind of start traveling. I mean the limitations and the restriction, which were kind of ongoing by various corporate houses have been kind of taken away now by end of September and partly after the Deepavali. And we hope that the corporate travel will get -- gain momentum post Deepavali. That's what our view is. And we are already seeing the growth of my segment. People have started traveling for meeting in conferences on the corporate side, that's a very welcome sign as people started traveling on that. So a lot of corporates are now taking group travel already for their meetings and conferences. But that also is a good indicator that corporate travel is slowly coming back.
Just to clarify, what percentage of mix will it be now?
So as I said, that we are now almost 50% recovered, 50% recovery we have seen on the corporate side of the business. When we talk about the contracted corporate business, which used to be about -- pre-COVID level about 24% of our overall business. So we have seen almost 60% recovery of that. Given the situation we are in today, we hope that post Deepavali this will kind of gain momentum.
The next question is from the line of Achal Kumar from HSBC.
I have a couple of questions. So first of all, I just want to understand about your networking strategy. So you are growing your network. But then, of course, as we have seen historically that when you go to the new station, it takes almost like between 6 to 24 months for the demand to develop depending on the situation. So how do you see that in your case? I mean are you going to expand your network? Or are you going to consolidate on the existing stations? So how do you see and then linked to that, how confident you are that you'll be able to deploy your capacity more commercially or profitably going forward especially given the fact a lot of capacity could join, as you said yourself will be focused on growth? So how do you see that overall situation? If you could please discuss a bit more on that.
Okay. So a couple of good things that have happened to us. First is we've discovered the strength of new markets. As we've said in the couple of last quarters, I think, while metro-to-metro markets had some dampening in demand, we were very pleased with the growth we are seeing in Tier 2, Tier 3 cities. So as a result, a lot of our focus has been there. Now as corporate travel comes back, we now have an opportunity to add back some capacity metro to metro. So that's one area of growth. The second one clearly is international. And international, while our revenue numbers are strong, they are on far lower capacity levels. So getting back to the capacity level is, again, a huge growth opportunity for us. And then thirdly would be actually pure growth into new markets internationally, which we have not done. We've opened a lot of new stations domestically. But as soon as this -- the -- so bubble arrangements, also charters, also hopefully scheduled operations, we hope to grow internationally as well. So to tell you, I mean, I think, growth opportunities are very, very high. We're just meeting for this COVID and its sort of ramifications in terms of international barriers to grow away. And then we'll be then growing both domestically and internationally.
So sir -- so do you -- so are you saying that you will continue to grow on your network? Or do you think once the demand returns or corporate demand returns, you'll be focused on more consolidation on the existing network?
So okay, I'll answer it as, are we adding more frequencies? Or are we expanding our network? The answer is both. We'll be adding more frequencies into existing markets. But at the same time, we'll be expanding our networking to new stations as well.
Right. Fair enough. My second question is around the industry structure. So basically, as you know, of course, although others not clear how the Tata Group will operate its overall aviation business. But assuming they'll combine all the airlines into one, how do you see the overall competitive landscape changing for the industry? And of course, linked to that, we are probably going to have 2 more airlines, Akasa and Jet. Obviously, they will not be competitive in the -- right from the start. But overall, they will gain some bit of market share. So overall, how do you see the industry structure developing in the domestic as well as international skies? Could you please comment on that?
And so I think the consolidation of the Tata Group actually add some clarity to the industry structure, which would be very helpful. Because they will be a full-service carrier. Again, we're speculating. We don't know what the Tata Group is going to do. But all indications there are that there will be a full service carrier that they will be focusing a lot on international markets, markets that we don't even compete in, the London's, the New York's, et cetera. So -- and having that whole group sort of working in a full-service carrier mode, I think, is good, it's healthy for us. Because there'll be some sort of natural separation in the sense that we'll be a low-cost carrier with our business class, with our premium, economy, et cetera, and flying narrow-bodies in 7-hour market range. And they will tend to be Vistara-type model with business class and premium and wide-bodies flying into a bigger circle of international markets. So I think that preparation is actively healthy. It'll create some discipline in terms of marketing and pricing and that's good. To the question of Tata, yes, there will be another low-cost carrier. And I would say that the market is sort of -- yes, India, clearly scope for a full-service carrier. But the fee ink for low-cost carriers will get crowded. I mean there's indiGo, there's GoAir, there's QIP. Now there's Tata. So that field is getting crowder and there'll be more competition there. That's how we see it.
And of course, in case Tata decides to run 2 airlines parallelly, one low cost and on full service, then it would be another challenge you think?
We'll have to see how that evolves, yes. We'll have to see how that evolves.
[Operator Instructions] The next question is from the line of Aditya Makharia from HDFC.
Happy to hear the positive commentary after a long time. I just had a question on your aim, obviously, you're phasing out the CEOs quite nicely. And that helps for the time when fuel prices are going up. But I was also noticing the fleet of other competitors like GoAir or Vistara, and we see that there neo planes are also pretty much shipped maybe 30%, 50%, whatever it is. So do you think that this advantage which you have will not really last for that long because others are pretty much catching up?
So look, lower fuel consumption is good. And it's not a competitive advantage, it's an absolute advantage. Because given the pricing in the marketplace, we need to reduce our costs and our costs come down, it doesn't necessarily mean that prices will come down. As you can see, we -- right now, we're witnessing a reasonably robust pricing environment. And to the extent we bring our cost down, that's great. Now other people get their cost down. I mean so what? It's not like the pricing is going to tumble as a result. I think the margins will just expand. Yes. So yes, we are doing everything we can to get to a full new fleet. Other people should do the same. I don't see that as an issue for us.
Got it. Second is, obviously, our market share in COVID went up to, I think, 55% plus maybe on the domestic side. Is there any medium-term market share target which you would be happy with? Because clearly, normally across 50%, it gets that much more difficult to maintain share. There are certain costs which come with maintaining that higher market share. So is there any number you would like to have in mind?
We do not target market share at all. We really -- this -- market share is just a byproduct or a consequence of our actions. What are our actions? Our actions are targeted to running a darn good airline. We want to be a world-class airline. We are a world-class airline, and we can move to want to stay there. After that, if the customer prefers our product, again, that's a nice byproduct. The second thing that we do is we expand our network. So for example, we just added Dimapur to Delhi nonstop. Well, we've got a lot of thank you letters from Nagaland. "Hey, we've been waiting for this flight for so long." Now does the market share go up as a result? Yes, sure. But we have no targets for market share. We only have targets for good customer service and network expansion.
Our next question is from the line of Sarfraz Bhimani from Motilal Oswal.
So my question is in respect to the discussion you already had in terms of new entrants coming into the industry. So what are your thoughts in terms of, say, ULCC, which the other peers are also talking about?
So ULCC, we've, obviously, studied that model at great length. And the way -- let's take again the Spirit example. Because they are the sort of pioneers of ULCC. And the way they got to where they are is by adding a lot of seats. So they increase the density compared to the like in the United and the costs were lower. In India, that game has played out. I mean all of us whether it's Spice, Us, GoAir, we have the maximum number of seats in their plans. The regulations don't allow any more seats, so you can't increase that. The second thing that a pioneer like Spirit would do is to charge for all kinds of things, and most importantly for baggage. Now the DGCA, again, rules that prevailing order, if you will, and it says those 15 kilos free. After that, you can charge. That's even playing field for everyone. If DGCA says no everyone can charge for the first 5 kilos, then we'll also be there. So it's very hard for new entrants to distinguish themselves from IndiGo in terms of how we will have lower costs. In fact, our aircraft ownership costs, as you know, are one of the lowest in the world. Our seat density is the maximum it can be for everyone. Baggage rules apply to everybody. So you can brand it anything you want, but are there any really key distinctive features. We don't seem to think they are.
And the second question is, so now see more concerns on the demand side and definitely will grow from here on as well. What do you think on the inside? So in the past quarters also, we have been talking that India have been the lowest and good growth from here on. But with this, [ DGCA ] in the air of a ban for, say, 16 days onwards. I mean what do you see because the competition in that range has been strong? So any -- that you can give in terms of where the aids could settle?
Sure. First of all, we've been pushing the DGCA and Ministry of Civil Aviation to remove the fair cap beyond 15 days. Because earlier, what was happening is, yes, the fares were high, but they were high for too long, and therefore, we could not stimulate traffic. That's why our load factors are suffering. By restricting this higher fare for the first 15 days is good. Because from 16 days onward, we are now able to stimulate our traffic, and that's why we're seeing load factoring improvements. So from an overall revenue management, this is very good. Now -- so the government has been fairly responsible instead of listening to the industry and doing the right thing. What happened if the government said, "Okay, we are just getting out of this and you guys do what you need to do"? I think that would be a welcome step, too. I think the industry is mature enough. We can manage our own fortunes and I think we'll all behave responsibly.
The next question is from the line of Pulkit Patni from Goldman Sachs.
My first question is on overall cost. Now that the government has sold Air India, I'm sure there will be initiatives taken in order to support the industry profitability. With that view, do you think this removal of VAT, which has been done by, I think, 4 states on ATF is something that could be a big support to profitability if this is accepted by other states also? That is the first question.
Yes, we certainly hope so. All the airlines, we've met with the ministry several times. And we've showed them how out of line indirect taxes are in India. As you know, we pay a central excise tax. We pay VAT fees, then we pay IHC on repair parts. We pay the excise taxes. So we put it all together, and we're like very highly taxed as an industry. So the government is listening to us, and we also acknowledge some of these inefficiencies that are there in the industry, and I welcome the Minister's first initiatives in terms of getting some states at least to remove them. But that's only ample and they tend to be the smaller states. We need the bigger states in particular to jump in. But hopefully, that's going to happen over time. So yes, we are hopeful and it will be a big support for the industry.
Similarly, this whole gift city allowing leasing companies to come and give in some tax incentives. Do you think that could also be sort of profitable in terms of lower lease costs for us over the longer term, if that is something that picks up? I'm just trying to understand from an industry profitability perspective, what more could come through over the medium term.
Yes. So this is Jiten. Yes, that's possibly that gift city is a model which once starts developing and when the lessors coming through, that will definitely help us. But it's in a nascent stage today, so very difficult to predict how it will evolve. But yes, if everything, the way it's structured and the way government is supporting it, if all the -- let's all start playing with that, I think, it will be -- help support the industry in overall business.
And in general, to the extent, the entire ecosystem evolves from sort of leasings to...
Ladies and gentlemen, it seems we have lost the line for the management. We request all of you to stay connected while we reconnect them. Line connected. Over to you, sir. Yes, please go ahead.
Okay. So we were talking about gift city and so forth. And I was saying that the entire ecosystem around aviation, to the extent it developed, it will be very, very helpful for the airlines. As you know, whether it's line maintenance, whether it's engine maintenance, whether it's aircraft maintenance, you pay a lot of precious foreign exchange, trying to get that work done. So the government is making a big push that listen, some of this ecosystem needs to come back to India and they're trying to work with engine repair shops, trying to work with aircraft maintenance shops to get this done. And so yes, we welcome the move. I think the government is very sort of aggressive and ambitious in what it wants to achieve, then it will be very helpful for all of us.
Sure, sir. And my last question is just trying to understand yields a little better. Would you have any -- or can you share a sense of if we remove the whole charters from the base, how much have the yields increased in that case?
No. Look, yields have increased across the board. Frankly, they're improved in cargo. They have increased in charters, they increase domestically. They've increased internationally. So we see -- not gradual, we see sort of comprehensive improvement in every segments of what we do. And to an extent, as we've been saying, it's kind of inevitable. Yields in India just dropped way below reasonableness. And they just have to come back. And now I think with all the different strains of traffic, yes, corporate travel is slowly coming back. The SMEs, there's a lot of growth in them. Construction companies, traders, and then there's movement of migrant labor as well. So all of these things says that, yes, it is going to come back, and this I think is what we're seeing. It's a structural shift in my mind. It's not a one-time episodic or instant up.
And since we are speaking on the 28th of October, is that momentum continued even in October, the yield improvement?
As I said in my opening remarks, October, revenues booked per day, average revenues booked per day. So that revenue hasn't traveled yet. It's just booking now, and therefore, it'll travel in November or December. Average revenues booked per day is the same as it was in January 2020, pre-COVID. And this has happened while we're offering 20% less capacity. So you can see the strength in pricing from that one key number.
The next question is from the line of Aditya Mongia from Kotak Securities.
I had a few questions from my side. The first one was a question on, I wanted to get a sense from you as to how it would impact the growth in overall international volumes for India, which are going 1x GDP versus domestic growing much faster? And, b, what kind of impact do you think this event is going to happen on domestic yields for airlines?
I'm not sure I understood the question, frankly. Can you -- okay, break it down into one piece. What's the first question?
The first question is that for long, India's international traffic volumes have grown at 1x GDP, whether the domestic has grown much faster. Does privatization of it make any difference to this thesis? And does the expense start showing faster in line the domestic growth from hereon? And does everyone benefit?
I don't think I have an answer to that. Let me just, say international, what do we see happening? International, what we see happening is that a lot of carriers have been carrying international traffic in and out of India one stop. So I was in Milan the other day. I mean just to give you a narrative here. And I was definitely trying to get on different airlines. So first I tried Etihad to Abu Dhabi and then Qatar to Doha, and the Emirates to Dubai. And in every one of those airlines, there was a long line of people standing who were all Indian. And I'm like, "Oh, my god, these people are going to Abhu Dhabi, or they going to Doha, are they going to Dubai, ultimately to get to a Delhi." And that's happened in directions because of Singapore, because of Bangkok, because of Dubai, traffic is carried out of India on a one-step basis. Now we have an opportunity, whether the starters do it or IndiGo does it to carry the traffic nonstop. So it's a shift from a type of traffic. And one stop, as you know, is always lower yielding. So we see this as a great revenue opportunity for Indian carriers, whoever makes use of it. Domestically also, we see growth, as I said, in cities that before, not even on the network. So on both sides, international and domestic, I think, the Indian aviation is going in for a period of good revenue growth.
So coming on the question on yield. Let me put it separately. As things tend right now, you are seeing the comprehensive improvement across sectors and yields in the last quarter gone by. And you're expecting that yields would probably remain pretty good incrementally also. What is the risk that you see to the futures happen? Because in 1Q and 2Q, yields have just gone very, very differently. And I'm confused as one can even take a cause on yield in this sector. So any thoughts from your side, please, to be stable from here on? And just to add to that would be useful.
Are you saying what are the risks to yield?
Yes.
Okay. So the risk to yield is that airlines start behaving irresponsibly, that people run out of cash and say, "Oh my God, I need to raise cash." And this happened across the world. You have a couple of bad players -- I won't say bad players, a couple of weak players who are focused on cash rather than profits and sort of do crazy things, but that is short lived in my mind. And structurally, I think, yields have improved and will continue to improve, and we might have, like you said, what is the risk. There's a risk of one airline sort of trying to raise cash. Other than that, frankly, I don't see too much risk. We've been through a batch period, frankly, COVID, oh, my god. It was awful. But we are coming out of it. And I think the structure things that when you take over from the cyclical sort of panic we've had over COVID.
Our next question is from the line of Iqbal Khan from Edelweiss.
Also just a couple of the bookkeeping questions that actually the question has already been answered by you. Just want to know the cash burn during the quarter and the cargo revenue, which you mentioned that it has increased a 16% sequentially.
So cash burn. Let Jiten answer your question.
So cash burn, yes. So as we -- as I mentioned in my script, we have significantly improved from last quarter. And right now, our cash burn is down from what we reported in the last quarter by -- right now, we are at about INR 20 crores per day compared to what we reported in the last quarter, which is about 39%. In terms of the cargo, what was the question?
Let me address that cargo question. So there are some structural shifts taking place in the cargo. First of all, let's keep in mind that both export import volumes into India are growing, the economy is strong and international trade is growing. So that itself creates the volume of its own.Secondly, widebody capacity worldwide is down. And thirdly is regulation. So there were airlines like Cathay and Korean who were doing a lot of one-step cargo out of India and the government has recently put a [indiscernible] on that. So that's not allowed. And the fourth is, as you know, shipping itself is in some sort of congestion ports, et cetera, congested and shipping is a challenge. So you look at all these different factors. Regulation is in our favor. Shipping to airlines substitution is in our favor. Indian volumes are growing. So with all that, cargo really is a good story and will continue to be a good story going forward. So yes, our cargo volumes are growing, but we haven't even started this freight as of yet. And we are, as you know, from May onwards, we're getting 4 narrow-body providers. So we think cargo has been a big story going forward.
Our next question is from the line of Binay Singh from Morgan Stanley.
Just a question. Like when you look at -- I'm trying to get a sense on does IngiGo have any sort of pricing power or a yield power over peers? Because post COVID now your network is much stronger. The airline has done quite well in terms of on-time performance and customer complaints. So does that give you some sort of an extra yield sort of premium that you can charge to the consumer? Any sort of takeaways from how yields and high competition sectors are -- like the metros are doing for you versus your peer group?
Okay. So let's first start with the basic fundamentals. Airlines worldwide had no pricing power, okay? We are commodities. People will spend INR 1,000 extra on cabs and hotels and even spend INR 50 on an airline. So airlines have no pricing power, that's step one. Having said that, then it all comes to the mix of traffic you carry. Are you carrying all passengers who have booked 30 days in advance to the lowest are? Or are you getting enough of the mix in the closing fares?And then are you getting some better connectivity because you've connected, you're in a better frequency, you have better connectivity and therefore, you get a better mix. So the only way you get to a higher yield is not too higher price per se. You match, you look us up on any of the OTAs, we all match each other. But hopefully, with a better product, with better frequency, with better connectivity, you get a better mix of traffic onboard. That's the only way you make yield differentiation. And fortunately for us, we have those advantages, yes.
The next question is from the line of Mitul Shah from Reliance Securities.
My first question is on aircraft in terms of the CEO to neo. So by next year, we earlier indicated that all the CEOs will get out a neo conversion license. So we'll still stick to that plan?
Yes. This is Wolfgang Prock-Schauer here. So our plan is, first of all, I cannot confirm that we have had in there or have a very ambitious exchange program, modernization of fleet. So we have totally planned for FY '20 and 2021 until March '22 to change something like 100 CEO aircraft with new aircraft with all the advantages to new fleet test. And then looking forward further. By end of '22, we should have basically all new fleet. There are a lot of things need to be done still in progress, but we are confident that we can return to all new fleet by end of '22.
And sir, after this complete conversion from -- to neo, so what would be the -- I know that you will not give probably exact numbers, but FY '23 onwards for next 2, 3 years, what would be the ballpark indication in terms of new aircraft addition? And also, if you can help me with what would be the combination in terms of finance lease and operating lease. Are we okay to have this current 14 numbers or the finance lease or we still would like to reduce it?
Okay. So for the next 2 years. And I'll just talk calendar years, it's easier in my mind. Our fleet is really in account is not growing much, marginally, it might go by 2%, 5%, those sort of numbers. We have a lot of churn. So we'll take delivery again, broad numbers. We'll take delivery of 50 airplanes, returning 45 airplanes and so on. But through that process, though, our capacity will go up a little because we are getting a bigger number of A321. After 2 years, we start seeing the growth in '24 -- in the year '24 and beyond as the new orders come in. But until then, discount remains more or less stable with some capacity growth. There was a second part to your question on...
Yes, sir. So how these incentives are trending?
How the...
Incentives on SLB are trending now directionally?
We are happy with what we're getting. And yes, we are satisfied.
And that earlier question on finance and lease -- operating lease.
Yes, I knew I was missing something. So as you know, we own 14 airplanes. And our plan was to own a few more. However, in the meantime, our balance sheet, as you know, has weakened considerably. And our first goal will be to repair our balance sheet. So we are not eager to go out and pay cash for airplanes at this time. So our first focus is on getting our balance sheet back to a healthy level. And then we'll probably go back to our original plan. As you know, airlines worldwide, have a mix of lease versus owned aircraft. We are almost close to 100% leased aircraft. And we'd like to move back a little more towards ownership, but we -- that's a long way off. We need to repair our balance sheet before we even think of that.
Okay, sir. Lastly on -- I understand it's too early, but if I have a question in terms of April and May vacation, so do you see any inquiry level or compare to like a pre-pandemic kind of people used to inquire 4, 5 months before or booking something like that for that period right now?
April, May is too far. April, May is way too far. I mean we have visibility of about 60 days, maybe 90 days. April, May is -- no, we have no idea, frankly.
No. Right now, you don't see any -- you don't see any inquiry levels or even booking for those periods?
No. I mean marginal, might be a couple here and there, but no, nothing meaningful.
And sir, lastly, on a broader sense for next 2 years, 3 years point of view, as an industry, how do you see cargo segment growth?
We see rapid growth. We are very bullish. I mean people have asked questions on the cost side. People have asked questions on the revenue side. People have asked questions international versus cargo versus domestic. We see a steadily improving revenue picture. We also are cautiously optimistic that we might get some cost but it not because of something heroic that we are going to do because of actions the government is taking. Whether on VAT, whether on bringing MROs in but those sort of government actions might help us a little on the cost side. So if you can get the revenue improvement that we anticipate and if the government has a little bit on the cost side, I think, we'll be okay.
Our next question is from the line of Arvind Sharma from Citi.
Sir, 2 questions. First of all, on the lease part. So in the international travel, which you said, almost back to 1/3 of the previous levels. I believe it's still mostly double size. As and when we shift from double to more regular operations, where is the lease been in the countries for international flights?
So you have to think of the structural shifts that are happening, right? So let me take a market -- let's say, Middle East hubs. They fly wide-bodies into our markets. We fly narrow-bodies. Now as you know, wide-body cost per seat is almost the same as a narrow-bodies. We are very efficient. But hey, we can't compete against wide-bodies. Now there is more and more structural shift towards nonstops. So take the U.S. market. American just said they'll do Seattle to Bangalore. They'll do GSK to Delhi. United is doing Delhi to Chicago to New York to San Francisco. These nonstops weren't there before. Now when all these nonstops take traffic away, they're taking traffic away from the Middle Eastern hubs. When that happens, there will be fewer wide-bodies that can come into the Indian market. And if the fewer wide-body is coming into the Indian market, that's good for our narrow-body point-to-point to the Middle Eastern destinations. So I see that as an yield improvement, structural shift that will be with us for some time to come.
Got it, sir. So even when their flight start, there will not be marked big client in the lease as far [ IndiGo ].
Because I think the shift you will see in Indian aviation is that Tatas will do more nonstops into various markets around us. IndiGo will do various nonstops in the market around us. And therefore, the yields in the sort of big hub markets whether it's Bangkok or Singapore or Doha, will improve for all of us.
Got it, sir. Sir, second question is on...
There's not -- it's nothing happening next month. It's a long-term picture.
Right, sir. Sir, second question is on the financial part. I don't if you can share that. In the reported depreciation and amortization expense of INR 12.5 billion, how much was amortization on the ROE assets? And concerning the reported interest expense of INR 5.7 billion, how much would be the interest accrued on the capital equity? Would it possible to share that?
We don't normally share details on these numbers, but I can confirm the amount. So this is a large portion of the amounts are included in that. So both the amortization and -- I can confirm that. But in terms of number, we don't share the numbers.
The next question is from the line of Varun Ginodia from AMBIT Capital.
I have 2 questions. Number one, your free cash balance increase quarter-on-quarter despite a INR 20 crore per day cash burn. So if you can provide the liquidity ingestion measures that you undertook in the quarter gone by, how much did you add it by way of liquidity injection? And what is the amount that you expect to do in the remaining part of the year in second half? And related part to that question is, any update on the QIP, if you can provide that as well, that will be really helpful. That's my first question.
Jiten, Take the first.
So I'll take the cash part. So we -- our financing initiatives, this time, we raised about INR 12 billion. We did mention last time that we have a visibility of INR 55 billion during the various previous measures taken in the quarter that has increased to now INR 65 billion. So we have a total visibility of INR 65 billion of which we have utilized about 39. We -- this quarter also saw increase in forward sales, which has helped us enhance the number, plus the contribution numbers in terms of numbers are also looking better. So in an overall basis, if you look at the cash burn, the financing initiatives as well as forward sales, we are -- we have achieved number -- the incremental. And as we speak, our forward sales look stronger in the current month also.
And on the QIP. We've always struggled with this issue because we never felt the need for the cash as such. We don't need it for working capital. We don't need it for CapEx. It's like, why do we need the cash? And the only answer is it is sort of a flood insurance. We don't know if there's a COVID fee or what happened to the government shuts down again, is those sort of disaster scenarios that we were looking at QIP for. So we continue to sort of review it with the Board every time we meet. But no decisions taken frankly.
Okay. Just one quick follow-up on the cash burn. So INR 20 crores per day, if I do that into a quarterly number, that comes to INR 1,800 crores per day of a cash burn. So your liquidity injection measures should be more than that for cash balance to go up quarter-on-quarter, right? I thought you mentioned INR 12 billion liquidity injections in the quarter.
Yes. Yes, we have got INR 12 billion of that, and we have forward sales also, as I said. Forward sales.
That's very mini portion.
The forward sales is giving us lots of cash. I mean thank god.
Okay, okay. And second question is -- sorry to again harp on the yield type. So one risk that you highlighted on the yield momentum, the positive momentum that we saw in 2Q is if the bigger airlines start putting down shares to raise cash, my sense is, isn't that a very high probability event given the cash -- the broken balance sheets that the other LCCs in the market have?So just wanted to get comfort on this yield number going forward. So that risk looks to be a very probable event to pan out over the coming quarters. So what's your...
You know the competitor's balance sheet far better than I do because I never look at them. So I really don't know. I can only tell you how the market is behaving and how we are behaving. These sort of risk, as I said, this is not structural. They'll come and go. It might happen, but it won't sustain itself. And you probably have a better understanding of it than I do, frankly.
Ladies and gentlemen, we'll be taking our last question from the line of Krupashankar NJ from Spark Capital.
I had a couple of questions. First is on the yield, sorry to harp on that. I just wanted to check that with the current yields, what would be the breakeven load factor given that still prices have been increasing the triple space? So can you just highlight on that?
See, load factor and yields, they tend to move in opposite directions, as you know. Ultimately, it's a question of what sort of RASK numbers are we going to produce. And I'm sure the key question in everyone's mind is, when you guys are going to get profitable again, right? I mean that's a question the Board asked me, it's a question we ask ourselves. We don't know, but we are closer to it than we were 2 months ago. We're closer to it than we were 1 month ago. Three months ago, we wouldn't have been there to think of profitability. When we had that huge quarterly loss last time we met with you, we know on a thought of profitability. Now we are dreaming dreams about profitability again, but we don't know when we'll have it.
Right. So no indication on breakeven load factor, perhaps something which we can look forward to?
It will be more sensible to ask a breakeven RASK factor. We know what our unit costs are and what should our RASK be? And because, as I said, we sort of manage between both load factor and needs to get to a good RASK number. So we do have that number in mind, but I don't mean we're willing to share it yet. And I can only assure you that you're working hard to get there.
Understood. One more question from my side is that on the last conference call, you had mentioned that a lot of bookings are getting bunched up towards the last 15 days. Looking at the trend of [indiscernible] as what you have mentioned and the cash generating, so how are you seeing the yields differential in the less than 15 days versus later in the 3-day channel?
This is Sanjay. What I can say is we still have some regulation around fares within 15 days. So obviously, the average price during that time is much higher. But as far as booking [indiscernible] is concerned or booking trends are concerned, we are now, as Rono has mentioned earlier, that we are almost at par with our January 2020 tables that's where the booking curves are concerned. So we are getting almost, say, 30% of our booking 30 days out, out of the total booking which we are getting on the day of booking. We are seeing a booking curve now getting to a pre-COVID level of January 2020, which is a very healthy time and a good sign. Because I see booking advance and we are able to kind of push the load factor up to the requirement level -- required level. So that is what we are seeing right now in marketplace.
Ladies and gentlemen, that was our last question for today. In case you have any further questions, feel free to reach the Investor Relations team of IndiGo. On behalf of IndiGo that concludes this conference call. Thank you all for joining us, and you may now disconnect your lines.