Indigo to borrow Rs10,000cr more for fleet expansion

Indigo, with the highest market share of ~40% in India, would be seeking shareholders’ nod for borrowing additional Rs10,000cr. As per the notice for the annual meeting, the company would seek nod for "authorising the board to borrow, from time to time, an additional sum or sums of money, not exceeding Rs10,000cr. The amount would only be utilised towards the requirements of issuing SBLCs (Standby Letters of Credit) in favour of the lessors in the ordinary course of business".

The company securitises its supplementary rental obligations due towards the lessors for aircraft on operating leases and issues SBLCs in favour of the lessors. The company will be taking deliveries of a significant number of additional aircrafts on an operating lease basis for which new SBLCs will be required to be issued to the lessors. Indigo further said that it has initiated cost saving initiatives on the charges payable to the banks for availing such facilities. In September 2016, shareholders had approved borrowing limit of Rs20,000cr which will increase to Rs30,000cr.

Indigo has a fleet of 159 aircraft, the largest in India and an outstanding order book to purchase ~400 new aircrafts by 2025. Its ~87% revenue typically comes from passenger segment (91% domestic and 9% international), while ancillary and cargo segments constitute the rest.