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India’s largest domestic airline says it is building a more than $ 1 billion war chest as it prepares for a third wave of Covid-19 infections, just as it begins to retreat. brutal outbreak nationwide.
Ronojoy Dutta, CEO of InterGlobe Aviation, father of IndiGo Airlines, told the Financial Times that he expected the company’s business to return to pre-pandemic levels by the end of the year, but warned that another coronavirus wave in November it could cause more interruptions.
The budget airline plans to raise $ 30 billion ($ 410 million) through a qualified institutional placement, a capital raising tool used in India, to prepare for the worst case scenario. IndiGo also plans to raise approximately $ 600 million through bank credit and aircraft sales and leases.
“Doctors are telling us that there will be a third wave. There are no inconveniences, and it will probably come in November, December, ”said Dutta.
“The board says” look, the environment is volatile. . . What happens if we stop for another three months, what happens? And the income is zero? It is for this type of disaster scenario that we are building insurance, ”he added.
Coronavirus cases have been steadily declining in India after peaking in mid-May, although the country recorded a one-day world record of more than 6,000 deaths this week, driven in part by the Delta variant first identified in the country.
However, there are still about 100,000 cases reported daily and many countries have issued travel restrictions for passengers from India.
Before the rise earlier this year, Prime Minister Narendra Modi minimized the threat of a second wave and claimed that the country had gained control over the virus.
As the second wave recedes, New Delhi has adopted more careful messaging, warning of a third wave and expanding its vaccination drive.
India’s airline sector has been won by regional blockades across the country. IndiGo passenger capacity fell from 80% in February to 30% in mid-May.
InterGlobe, which has a market share of more than 50%, reported this month its fifth consecutive quarterly loss.
However, Dutta said it was unlikely to be a third wave as harmful as the second. “As long as [India keeps] vaccinating about 700,000 people a day. . . it will be a very flat wave, ”he said.
He also hopes the IndiGo will benefit Indians who take “revenge holidays” after being restricted to their homes for months, adding that the company has added new routes to holiday areas like the Maldives.
The pandemic “has pushed India back at least two, three years,” Dutta said. “But we will catch up. . . I have a lot of faith in India’s growth history. ”
His cautious optimism contrasted with the exuberance of Indian actions, which came recently record highs.
The World Bank cut India’s growth forecast for this year from 10.1 to 8.3 per cent, blaming the second wave of coronavirus.
“The recovery will start from August, for three months it is still a virtual blockade in many states,” said Madan Sabnavis, chief economist at Care Ratings.
“Now there is almost supposed to be a third wave, so there will be better preparation,” Sabnavis added. “The game book is more or less ready.”
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