Interglobe Aviation Limited (IndiGo) shares rose as high as 10% to Rs 1,808.50 after the company announced plans to raise fares in order to return to profit following a loss in the March quarter.

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On the BSE, the stock reached a high of Rs 1,808.50, up 10% from its previous closing. At 11 a.m., the stock was trading 4% higher on the BSE, at Rs 1,711.25.

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InterGlobe CEO Ronojoy Dutta said profitability was the top-of-the-mind priority for the company. “You almost have to hit the point just right, because you can keep pushing up fares and then at a certain point demand actually falls off,” Dutta said in the earnings call. “So you have a tug-of-war, but the key to profitability is to keep managing our business on the revenue side.”

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The company posted a consolidated net loss of Rs 1,681.80 crore, owing to the impact of Covid’s third wave, a record rise in jet fuel prices, and rupee depreciation. Revenue increased by 29% year on year to Rs 8,020.75 crore. Operating profit margin fell drastically to 2.1% in the fourth quarter, down from 10.4% the previous year.

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“The Q4 loss was driven more by a weak macro in the first half of the quarter. Indigo’s pruning of costs, increasing prices and playing the balancing act on revenue maximisation has helped it stem losses in March. Superior network coverage and yield management are likely helping Indigo make small profits starting Q1. It expects rational pricing in the market to continue, and we concur,” Kotak Institutional Equities said in a note to investors.

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The company upped its March yields to Rs 4.7/ASK (available seat kilometres), up from Rs 4.4/ASK in the March quarter. “It has then seen an increase to Rs 5.4/ASK in May, which we believe will ensure that Indigo makes money at current Rs 125 per litre of ATF price, current 80% load factor and current volumes for IndiGo that have already breached pre-Covid levels for the domestic market,” Kotak Equities said.

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IndiGo had a total cash balance of Rs 18,227.5 crore as of March 31, whereas its total debt (including capitalised operating lease liabilities) was Rs 36,877.80 crore.

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According to the company, capacity would expand by roughly 150% in the first quarter of the fiscal year 2023, and by 55-60% for the entire fiscal year.