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High airfares delay recovery in hospitality sector: Xigo

High airfares delay recovery in hospitality sector: Xigo

Higher airfares due to rise in oil prices due to geopolitical tensions have delayed the recovery of the hospitality sector; While the benefits of international flight resumption should be visible in the current fiscal, IPO-bound online travel agency, ‘ixigo’ said in its annual report for FY22.

Passenger confidence has improved and demand has picked up.

“At the end of FY 2012, though train reserve demand in the country had already exceeded pre-Covid levels, daily flight passengers as well as bus passengers were still not fully recovered. International flight schedules have resumed and we expect international flights to start recovering in FY 2013, although the Russia-Ukraine situation has led to an increase in oil prices that continue to keep fares at high levels. and prevents more rapid recovery,” the company’s co-founders said in a letter to their shareholders.

‘ixigo’ said its financial performance in FY22 and FY21 was “substantially impacted” by Covid and it had to “take emergency measures to reduce operating losses”.

These included moves like temporary pay cuts and “significant reduction on other fixed overheads”. In addition, the second and third wave of infections (April-June 2021 and December 2021-February 2022) “caused business disruption”, resulting in operating losses.

finance

While revenue grew 180 per cent year-on-year (YoY) in FY22 to ₹380 crore (approximately), the company lost 380 per cent to ₹21 crore. In FY21, the company had made a profit of around ₹8 crore. In FY22, ticket revenue grew by 187 per cent to ₹362 crore.

Adjusted EBITDA stood at ₹6.2 crore during the financial year. Adjusted EBITDA was 24.5 per cent lower than the Rs 8.2 crore reported in FY11. The reduction in adjusted EBITDA was primarily due to an increase in other expenses, which increased 204.5 percent. (Adjusted EBITDA is calculated taking into account ESOP costs and other income.)

Other expenses that have seen a substantial jump on account of the free cancellation product/scheme for business flights since August 2021 include customer cancellation and refund costs – which increased by over 1,000 percent; Also due to the impact of the increase in free cancellation transactions in business sectors and the consolidation of ‘Confirm Ticket’ and ‘AbhiBus’ results.

Sales promotion and advertising costs also increased sharply by 567 percent annually; partner support costs (over 470 percent year over year); and payment gateway fees (up to 200 percent year-on-year), among others. The company recorded negative EBITDA of ₹7 crore (approximately) in FY22 as compared to positive EBITDA of ₹6.1 crore in FY21. Bank balances other than cash and cash equivalents grew by 664.85 per cent to Rs 79.80 crore in FY22, the annual report said.

Published on

23 June 2022

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High airfares delay recovery in hospitality sector: Xigo

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