India’s largest airline, Indigo operated by InterGlobe Aviation Limited on Monday said that it will raise up to Rs. 4,000 crore through the sale of shares to qualified institutional investors.
The decision came about in a board of directors meeting held today, August 10, 2020, in the light of pandemic situation during which Interglobe has reported the biggest ever loss last month.
In a regulatory filing, the airline said that “It has considered and approved the raising of funds for an aggregate amount exceeding Rs.4,000 crores through an issue of equity shares by way of a qualified institutional placement (QIP), in accordance with the relevant provisions of applicable law and subject to the approval of the Company’s shareholders and receipt of applicable regulatory approvals.”
The QIP allows a listed company to raise capital without the need to submit any pre-issue filing to market regulators from domestic markets.
Plans to raise Rs. 2,000 crore through the sale and leaseback of planes and other assets had also been announced by Indigo last month.
Boosting finances is crucial for Indigo as it halted its operations during the lockdown, resulting in a net loss of Rs.2.849 crore in April to June. The company had reported a profit of Rs.1,200 crore a year earlier. Higher maintenance cost and a rapid decline in demand has led to huge revenue loss for Indian carriers and is expected to be facing a loss as high as Rs. 1.3 trillion between 2020and 2022.
The COVID-19 pandemic has affected airlines globally as international travel curbs have kept travelers at home.