IndiGo, India’s biggest airline, plans to raise as much as Rs40bn ($534mn) by selling new shares after the coronavirus pandemic halted air travel across the world, ravaging the cash flow of carriers.
The board of the airline, operated by InterGlobe Aviation Ltd, approved raising cash by selling shares to institutional investors, it said in a statement to stock exchanges yesterday.
Airlines have found themselves perilously exposed to the pandemic as companies slashed business travel and tourism numbers tumbled, with governments imposing travel restrictions and closing borders. About 400,000 workers at airlines around the world have lost their jobs or are facing redundancy.
IndiGo reported a loss of Rs28.5bn in the three months through June, compared with net income of Rs12.03bn a year earlier. The carrier had also posted a loss of Rs8.7bn in the January-March quarter this year.
IndiGo is burning through Rs300mn of cash every day, despite drastically reducing flights, cutting jobs and slashing salaries, Chief financial officer Aditya Pande told analysts on a post-earnings call last month.
Aircraft manufacturers including Boeing Co and Airbus SE are resetting production targets as demand for new jets vanish. IndiGo is the biggest customer of Airbus’s best-selling A320neo jets.
The airline is also raising Rs20bn by selling and leasing back unencumbered assets, on top of a previous plan to raise as much as Rs40bn by measures including renegotiating contract terms with suppliers, Pande said.
IndiGo had free cash of Rs75.3bn and restricted cash of Rs109.2bn as of June 30.
The fundraising measures, along with its free-cash balance, should provide IndiGo with 10 months of liquidity, according to James Teo, an analyst with Bloomberg Intelligence. 
The airline’s capacity may fall by a record 64% this financial year, way off its original target for 20% growth, Teo said before the latest fundraising round was announced.