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IndiGo Plans To Hike Airfares, Shares Up Over 4%

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IndiGo Plans To Hike Airfares, Shares Up Over 4%
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IndiGo surged as much as 9.94 per cent to hit an intraday high of Rs 1,808.50 in early trade.

New Delhi:

Shares of InterGlobe Aviation Ltd, the operator of India’s biggest airline IndiGo, surged more than 4 per cent in late morning deals on Thursday after the carrier stated that it is expecting to raise ticket prices.

As of 11:24 am, the stock was trading 4.47 per cent higher at Rs 1,716.90 on BSE. IndiGo surged as much as 9.94 per cent to hit an intraday high of Rs 1,808.50 in early trade.

“Profitability is on top of our minds,” IndiGo Chief Executive Officer Ronojoy Dutta said in an earnings call.

“You almost have to hit the point — the sweet spot — just right, because you can keep pushing up fares and then at a certain point demand actually falls off. There is a tug of war going on between very good revenue performance and very challenging fuel,” Mr Dutta added.

On Wednesday, the airline reported a larger loss for the fourth quarter (Q4) as higher fuel costs more than offset a rebound in demand for air travel.

Net loss came in at Rs 1,680 crore for the three months ended March 31, compared with a loss of Rs 1,159 crore a year earlier.

However, the resurgence in air travel demand helped revenue from operations jump 29 per cent to Rs 8,021 crore. Passenger load factor, or the passenger-carrying capacity being used, rose to 76.7 per cent.

Yields, a metric of profitability, increased 19.2 per cent to Rs 4.40.

Last week, IndiGo appointed Pieter Elbers as its new CEO. Mr Elbers will join from October 1 after Mr Dutta retires on September 30.

Earlier in February this year, IndiGo’s co-promoter Rakesh Gangwal resigned from the board of directors of parent company InterGlobe Aviation, stating that he will gradually reduce the equity stake in the airline over the next five years.

Mr Gangwal and his related entities own around 37 per cent stake in this company. Mr Bhatia and his related entities own around 38 per cent of InterGlobe Aviation.

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