India’s largest national airline says it is building a more than $ 1 billion war chest as it braces for a third wave of Covid-19 infections, just as a brutal outbreak in the national scale begins to retreat.
Ronojoy Dutta, chief executive of IndiGo Airlines’ parent company, InterGlobe Aviation, told the Financial Times he hopes the carrier’s business will return to pre-pandemic levels by the end of the year, but warned that another coronavirus wave in November could cause more disruption.
The low-cost airline plans to raise 30 billion rupees ($ 410 million) through a qualified institutional placement, a fundraising tool used in India, to prepare for the worst-case scenario. IndiGo also plans to raise approximately $ 600 million through bank loans and aircraft sales and leasebacks.
“Doctors tell us there will be a third wave. There are no ifs and buts about it, and it will probably happen around November, December, ”Dutta said.
“The board is saying ‘look, the environment is volatile. . . How about we go on another three month hiatus, so what? And the income is zero? It is for this kind of disaster scenario that we build insurance, ”he added.
Coronavirus cases have declined steadily in India after peaking in mid-May, although the country recorded a one-day world record of more than 6,000 deaths this week, in part due to the Delta variant identified for the first time in the country.
However, there are still around 100,000 cases reported daily and many countries have issued travel restrictions for passengers from India.
Ahead of the push at the start of the year, Prime Minister Narendra Modi minimized the threat of a second wave and claimed that the country had taken control of the virus.
As the second wave recedes, New Delhi has adopted more cautious messages, warning of a third wave and expanding its vaccination campaign.
The aviation sector in India has been punished by regional blockades across the country. IndiGo passenger capacity fell from 80 percent in February to 30 percent in mid-May.
InterGlobe, which has a market share of more than 50 percent, this month announced its fifth consecutive quarterly loss.
However, Dutta said a third wave was unlikely to be as damaging as the second. “As long as [India keeps] vaccinate about 700,000 people per day. . . it will be a very flat wave, ”he said.
He also expects IndiGo to take advantage of Indians taking a “revenge vacation” after being confined to their homes for months, adding that the company has added new routes to vacation hot spots such as the Maldives.
The pandemic “has set India back by at least two, three years,” Dutta said. “But we’ll make up for it. . . I have great faith in the history of Indian growth.
His cautious optimism contrasted with the exuberance of Indian stocks, which recently hit records.
The World Bank has cut India’s growth forecast for this year from 10.1 to 8.3 percent, blaming the second wave of coronavirus.
“The recovery will start from August, for three months it is still a virtual lockdown in many states,” said Madan Sabnavis, chief economist at Care Ratings.
“Now you almost assume there will be a third wave coming up so there will be better preparation,” added Sabnavis. “The playbook is more or less defined.”
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