Aviation Industry Financial Analysis
Group 44
Pooja Gupta – PGP-20-213
Rahul Lakhotia – PGP-20-219
Ranjit Nair – PGP-20-221
Sucharitha S. – PGP-20-235
Yash Sanghavi – PGP-20- 239
Airline Industry Analysis
Balance Sheet
Asset-heavy Industry with cut-throat • Weak balance sheet
competition, with lower prices due to • Long-term Provisions
• Capital Intensive
Cash Flow
Govt. price cap which does not even • Growth driven by discounting
• Grounded Aircrafts as assets
cover the expenses. Operational costs ticket prices
• Significant amount of debts
like route costs and airport costs add to • Cash flow restricted due to
the expenses. A tough industry to Govt cap on prices
survive as evidenced by Kingfisher and • No robust credit line
Jet Airways. • Inability to raise equity
Expenses
• Power and Fuel Expenses
• Aircrafts on Lease Rentals
• Foreign Currency Risk
Market Share Market Share • Taxation Policy Income
• Airport Costs
60.4% 13.7% •
•
Perplexing pricing
Sales from Passenger & Frieght business
CAGR Revenue CAGR Revenue
• Inventory includes – Spares, Parts, Tools
• Ancillary inventory
23.8% 21.3%
CAGR is calculated for years 2017 to 2019
Liquidity
QUICK RATIO CURRENT RATIO
1.47
1.41
0.83 0.85 0.85 0.86
0.73 0.79
0.81
0.71 0.75 0.77
0.61 0.63
0.44 0.49
0.45 0.4
2017 2018 2019 2017 2018 2019
Liquidity status of IndiGo > SpiceJet > Industry standards
Unhealthy increase in Trade Payables, and loans and advances to subsidiaries for IndiGo and SpiceJet
Stable quick ratio for both companies
Solvency
Debt rati o Interest coverage rati os
1.5 1.1 1.8
-4.4 20.2
2019 2 0-3.6
18 -1.9
2 0-3.1
17
-3.5
11.4
8.86
1.49 1.6 2.19
1
-0.01
-0.36
-24.9 2017 2018 2019
42% increase in borrowings by SpiceJet in Fiscal year 2017-2018 compared to 2016-2017
Over 42% increase in crude oil prices in the year 2018-2019 led to increase in aviation fuel
8% depreciation in the Indian Currency in the International market.
Massive hit to profits owing to
crude oil price fluctuation &
Profitability rupee depreciation in FY19
Decreased EBITDA Margin and
Net profit margin
SpiceJet Ltd. RETURN ON ASSETS
2019 2018
Worldwide grounding of
InterGlobe Aviation Ltd SpiceJet Ltd
Boeing 737 MAX harshly
23.86%
0.14 0.14 impacted SpiceJet Ltd.
0.11 0.11
14.67%
Decreasing ROE from FY18 to
7.23% 0.01
FY19
2019 2018 2017
EB ITDA M a... N e-3.45%
t Profi t M ... -0.06
High fuel and lease costs
adding to the expense
InterGlobe Aviati on Ltd. Return on EQUITY
SpiceJet Ltd InterGlobe Aviation Ltd Foreign currency loss impacted
0.9
0.02 -13.1 0.31 0.44 the profits
-0.71
2019 2018 201 201 201
High depreciation costs
29.00%
18.30%
9.70%
Increasing investment in
0.50% aircraft fleet size, ground
EB ITDA M ar gi n N e t Pr ofi t support vehicles
M ar gin
Reduction in PAT
Operational Parameters
Average Seat Kilometres (ASK) Load Factor
27% 92%
17%
14%
86.20% 86%
2019 2019
Cost per Available Seat Kilometre (CASK) increased for IndiGo increased by 13.9% in FY19 from FY18
IndiGo owing to larger fleet size captured Available Seat Kilometre (ASK) by 27% SpiceJet by 14%
Load factor for SpiceJet higher than IndiGo due to larger fleet
Efficiency Ratios
Working Capital Turnover Multiple Payable Turnover Multiple
16.0 FY19 Days Sales Outstanding
6.0 14.7
13.4
4.0
2.8 2.7 IndiGo – 4.6 Days
8.1 7.6 SpiceJet – 5.4 Days
7.0
2019 2018 2017
-2.7
1.6 1.9 FY19 Days Sales Inventory
-4.0 -3.6 -3.8 0.6
-5.4 2019 2018 2017
IndiGo – 54 Days
Inventory Turnover Multiple Receivables Turnover Multiple SpiceJet – 36 Days
16.6
15.2 117.1
12.1 101.7 100.2
91.5
10.1 10.0 78.6
67.3 FY19 Days Payables Outstanding
6.7 7.2
6.0
4.6
IndiGo – 27 Days
17.4 17.8 16.2 SpiceJet – 52 Days
2019 2018 2017 2019 2018 2017
DuPont Analysis
PAT PBT PBIT Sales Average Total Assets
X X X X FORMULA
PBT PBIT Sales Average Total Assets Equity (Net Worth)
-2481.79 -2750.89 16007.92 357760.01 335300.95
X X INTERGLOBE AVIATION LTD
X X
-2750.89 16007.92 357760.01 335300.95 58624.39 FY20
1561.35 -1490.47 3599.16 284967.72 230705.37
X X INTERGLOBE AVIATION LTD
X X
-1490.47 3599.16 284967.72 230705.37 69447.49 FY19
-3160.83 -3160.83 -2078.23 91132.54 44133.31
X X X X SPICEJET LTD FY19
-3160.83 -2078.23 91132.54 44133.31 -3506.83
All Figures in Million Rupees
Suggestions to Management
Attaining industry lowest cost of operations
Maximizing and optimizing revenues
Developing new sources of revenues
Consolidating operations and strengthening financials
Thank you
Hope you had a wonderful flight!
