India's IndiGo looking at 'wet leasing' planes to meet travel demand

The logo of IndiGo Airlines is pictured on passenger aircraft on the tarmac in Colomiers near Toulouse

By Sethuraman N R and Aditi Shah

BENGALURU (Reuters) - InterGlobe Aviation Ltd, the operator of India's top airline IndiGo, on Friday said it is looking at 'wet leasing' planes to meet growing demand for air travel as supply chain disruption leads to delays in the delivery of new aircraft.

A 'wet lease' arrangement is one where the lessor maintains operational control of flights while providing aircraft and crew.

The airline has been extending some of its existing leases and postponing the return of aircraft, its new Chief Executive Officer Pieter Elbers said during an analyst call after IndiGo reported a second quarter loss.

"Another element which is under discussion today, and we are still in the final stages of clarifying, is a possible wet lease operation," Elbers said, adding that the market was recovering very rapidly.

Demand for air travel both within India and to international destinations has recovered to near pre-Covid levels.

IndiGo said it was optimistic about returning to operational profitability in the current quarter after its loss for the July-Sept period widened due to high fuel expenses and foreign exchange losses.

The airline expects a jump of about 25% in capacity measured by available seats per kilometre in the current quarter from a year earlier. It also maintained guidance for a 13%-17% capacity increase for the current fiscal year.

"In the coming years, we will build on our strong (domestic)foundations with more international aspirations," Elbers said.

Fuel costs more than tripled during the second quarter from the year ago period while foreign exchange losses due to a weaker rupee stood at 12 billion rupees ($145.88 million) for the three months, IndiGo said.

Yield, a profitability metric, rose 21% to 5.07 rupees per kilometre from a year earlier, while the carrier's load factor, or the passenger carrying capacity being utilised, increased to 79.2% from 71.1%.

The company's loss widened to 15.85 billion rupees in the July-September quarter, from 14.40 billion rupees a year earlier.

Revenue from operations more than doubled to 124.98 billion rupees from 56.08 billion rupees year ago.

($1 = 82.2600 Indian rupees)

(Reporting by Nallur Sethuraman in Bengaluru; Editing by Sriraj Kalluvila and Vinay Dwivedi, Kirsten Donovan)