Good evening, ladies and gentlemen, and welcome to IndiGo's conference call to discuss the Q4 and fiscal year 2021 financial results. My name is Aman, and I'll be your coordinator. At this time, the participants are in listen-only mode. A question and answer session will follow today's management discussion. As a reminder, today's conference call is being recorded. I would like to hand the conference over to your moderator, Mr. Ankur Goyal, Head of Investor Relations for InterGlobe Aviation. Thank you, and over to you, sir. Good evening, everyone. Thank you for joining us for the fourth quarter and fiscal year 2021 earnings call. We hope that you and your family are safe and in good health. We now have us our Chief Executive Officer, Rono Dutta, and our Chief Financial Officer, Jiten Chopra, to take you through our performance for the quarter. Wolfgang Prock-Schauer, our Chief Operating Officer, and Sanjay Kumar, our Chief Strategy and Revenue Officer, are also with us and are available for the Q&A session. Before we begin, please note that today's discussion may contain certain statements on our business or financials, which may be considered forward-looking. Our actual results may be materially different from these forward-looking statements. The information provided on this call is as of today's date. We undertake no obligation to update the information subsequently. A transcript of today's call will also be archived on our website. We will upload the transcript of today's prepared remarks today. The transcript of the Q&A session will be uploaded subsequently. With this, let me hand over the call to Rono Dutta. Thanks, Ankur. Good evening, everyone, and thank you for joining the call. Hope all of you are safe and doing well. We have had a very difficult year for the aviation industry. In the last quarter, we were seeing a lot of positive signs. The number of COVID-19 cases was steadily going down, the capacity allowed by the central and the state government was going up, consumers were showing a willingness to travel. As a result, we were showing an improving performance every quarter-over-quarter. However, with the second wave of the COVID-19 hitting us, we have seen a significant drop in travel demand. This, coupled with the fact that average fuel prices went up by roughly 26% quarter-over-quarter, impacted our results severely. As a result, for the quarter ended March 2021, we reported a net loss of INR 11.5 billion compared to a loss of INR 6.2 billion for the December quarter, and a loss of INR 8.7 billion for the same quarter last year. For the full fiscal year 2021, we reported a net loss of INR 58.1 billion. Till the end of February, we saw a steady recovery in traffic with over 180,000 passengers traveling with us daily, hitting peak load factors of 85% on certain days. Our daily bookings were also strong, reaching a peak of 231,000 bookings per day. Unfortunately, in March, we saw a resurgence in the number of COVID cases across the country, and we saw a 10% reduction in passengers. Our RASK for the quarter was INR 3.26, which was roughly similar to the RASK that we had in the December quarter. But the sharp increase in fuel costs, coupled with adverse foreign exchange impact, increased our losses during the quarter. During the quarter, we continued to increase capacity deployment in Tier 2 and Tier 3 markets to further strengthen our regional presence. We announced operations to seven new airports during the quarter. Of this, we have already started operations to Leh, Kannur, Rajkot, and Agra. On the international front, during the quarter, we were operating air bubble flights to 10 cities, mostly in the Middle East, as well as charter operations to various destinations. Our international capacity deployment increased by 36% compared to the December quarter. Overall, our international capacity in the Q4 was at around 30% of our pre-COVID international capacity. For the fiscal year 2021, our cargo revenues increased by 9.6% compared to the previous year. This has really supported us during these difficult times when the passenger services have been severely impacted. Building on the success of the cargo business, we have initiated our freighter program and are in the process of sourcing four A321ceo aircraft. The A321P2F passenger to freighter conversion is the most efficient narrow-bodied freighter available, offering 24 container positions and supporting a payload of up to 27 tons. The delivery of our first freighter is expected in the first half of 2022. Our investment in the freighter program will help strengthen our product and services in this segment and not only accelerate our own business recovery, but will also be a strong engine of economic growth for the country. During the quarter, we also continued to have the best on-time performance in the industry with an OTP of 95.17%. With the rise in the COVID cases, there were several additional restrictions imposed by various state governments, and our customer relations team did a tremendous job in addressing them. Our customer complaints have been the lowest among all domestic carriers at 0.1 complaint per 10,000 passengers. For this, I would like to thank all our employees, especially the operations staff, for the tremendous performance over the year. It's also given me immense pleasure to share that IndiGo is now certified as a Great Place to Work. Let me summarize the key highlights for the year. We are focused on strengthening relationships with our key constituents, including our lessors, vendors, customers, and employees. We are replacing our oldest ERJ aircraft with more efficient NEO aircraft. Our cash position is, of course, the most critical parameter in this crisis, and we have managed our cash position smoothly. The COVID crisis also gave us the opportunity to look at new ways of doing business. We have done charters for both passengers and cargo with great success. We were able to support the government with the initiatives of evacuation flights. We were number one on average OTP for the year. Our Net Promoter Score continued to be high, higher than what it was pre-COVID. We are strengthening our domestic network. We have opened new stations. We are increasing our penetration of smaller cities. We are remaining true to our mission of being a catalyst in the economic growth of the country. Therefore, deliberately and actively engaging in areas which need it the most, such as in the Northeast. Sorry about that. The most important pillar of strength for IndiGo is employee culture. I don't know why I'm doing that one. Excuse me. Okay. The most important pillar of strength for IndiGo is employee culture, and we are very focused on high performance and high employee engagement. In conclusion, we have our vision firmly rooted on the long term, and we are not willing to be distracted by the currents of the pandemic. This means that we are constantly questioning ourselves on what actions we need to take to keep the foundations and the pillars of IndiGo strong, so that when we emerge from the crisis, we are well-positioned for the good times that will inevitably arrive. Given this environment and lack of visibility for the year, our board of directors has not recommended a dividend for the current year. While our cash position remains strong with free cash of INR 71 billion as on 31st March, we remain committed to safeguard ourselves against the ongoing disruption by exploring various options of raising funds. In line with this, our board has approved raising of funds by way of qualified institutional placement of up to INR 30 billion. We have already initiated the shareholder approval process. In terms of our short-term outlook, we started seeing the decline in airline travel in March. This decline accelerated in April and May. While May started off with very weak traffic, we did see a modest turnaround beginning from the last week of May. This has continued into early June. This shows that passenger confidence returned swiftly with the decline in COVID-19. We are hopeful that with the reducing trend in COVID-19 cases and the increased pace of vaccination, passenger confidence and airline traffic will gain further momentum by early July. Let me try and give you a broad brush picture on our best guess for the domestic revenue outlook. February 2021 was the best month in our post-COVID-19. Booking on certain days in February peaked at approximately 80% of pre-COVID-19 levels. Our best-guess scenario is that we will hit February 2021 domestic travel levels again by the third quarter of FY 2022. The near-term outlook for international continues to be weak. A meaningful recovery of international traffic will probably be pushed to the Q4 of 2022. Given the weakness in revenues in April and May, we will of course report deterioration in revenue performance for the quarter ending June 2021 as compared to March 2021. After that, we expect to see a steady improving revenue trend for the rest of the year, provided, of course, the anticipated third COVID-19 wave is relatively flat. However, despite all the near-term challenges, our belief in the long-term IndiGo story with explosive growth in aviation remains intact. It is important to note that IndiGo has dedicated the past 12 months to strengthening its competitive position in the industry in terms of fuel costs, liquidity, customer service levels, network, and employee training and culture. We are therefore poised to expand aggressively, both domestically and internationally, once this pandemic is over. With this, let me hand over the call to our CFO, Jiten Chopra. Thank you, Rono, good evening, everyone. Hope all of you are safe and doing well. For the full year fiscal 2021, we reported a net loss of INR 58.1 billion and EBITDA of INR 6.2 billion and an EBITDA margin of INR 4.3 billion, 3%. For the quarter ended March 2021, we reported a net loss of INR 11.5 billion and EBITDA of INR 6.5 billion and an EBITDA margin of 10.4%. On the revenue side, the second wave of COVID-19 starting March 2021 resulted in demand erosion, thereby impacting EASKs, which decreased marginally from INR 3.27 in December quarter to INR 3.26 in March quarter. While our yields remained flat at INR 3.7, our load factors reduced from 72% in the December quarter to 70.2% in the March quarter. On the cost side, we were adversely impacted by fuel and forex, which was partially offset by additional capacity deployment. The fuel price went up significantly during the quarter by 26.1%, thereby increasing our fuel CASK from INR 0.75 in the December quarter to INR 1 in the March quarter. The foreign exchange went against us during the quarter, resulting in foreign exchange loss. While we had a gain of around INR 2 billion in the December quarter, we had a loss of around INR 1.2 billion in March quarter, impacting our costs and profitability adversely by INR 3.2 billion. As a result, our loss during the quarter widened, breaking the improving trend that we had been seeing in the past few quarters. Despite the significant jump in fuel prices during the quarter, our CASK, excluding foreign exchange compared to December quarter, remained flattish at around INR 3.8. Given the adverse profitability, our average net cash burn increased from INR 150 million per day in the December quarter to INR 190 million per day in the March quarter. Given the current performance erosion with second wave of COVID-19, we anticipate the cash burn to further increase in the June quarter. Managing our cash position continues to remain our primary focus, and we continue to work with all our stakeholders. For this purpose, we are working on securing credit line from vendors and entering into Sale and Leaseback arrangements on new aircraft. These two actions will likely result in additional liquidity of INR 45 billion for the coming year. Apart from this, we have also secured a board approval for raising funds by way of qualified institutional placement up to INR 30 billion, and this proposal is under consideration by the shareholders. We ended the quarter with a free cash of INR 71 billion and a total cash of INR 185.7 billion. A net reduction of INR 3.4 billion in free cash as compared to December quarter. The capitalized operating lease liability was INR 257.4 billion and our total debt, including the capitalized operating lease liability, was INR 298.6 billion at March end. With this, let me hand it back to Ankur. Thank you, Rono and Jiten. To answer as many questions as possible, I would like to request that each participant limit themselves to one question and one brief follow-up question if needed, and with that be ready for the Q&A. Thank you very much. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. An operator will take your name and announce it on the question queue. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the questions queue assembles. First question is from the line of Lokesh Garg from Credit Suisse. Please go on. Yes. Hi, sir. Good evening. Basically wanted to ask you, in this quarter, we have observed increase in combined rental and maintenance costs. Is that natural? Is there something else that we need to watch out for? Particularly given that somewhere in FY 2020, we started with quarterly provision of INR 2.6 billion, which was supposed to run out sometime in FY 2022. Can you just give us a perspective around that, please? Basically, our rentals are largely variable and going up because of the capacity has gone up. This year, this quarter, if you see our capacity compared to last quarter has significantly gone up, and that has added to our rental, which is primarily the supplementary rental we have talked about, which is variable in nature. Other than that, there has not been a very significant change. If you try and match that with our capacity movement, you'll be able to get to the answer. I would say that we are returning a lot of planes, but right now, many of them are sitting around in MRO during the return process. They're not going out as fast as we would like. That's adding some cost to the rental costs. Yes. I have very short follow-ups. One thing is, how do you put in perspective the government tinkering of capacity down to 50% and increasing the fares? What objective does that serve in the current industry context? IndiGo could have chosen that itself. Second question, which is more numbers, is what is the per unit efficiency that you're achieving on A321neo versus ceo aircraft that you used to have? Thanks. On the government capacity and the fare bans. IndiGo has consistently been against any kind of government regulation, and we have of course, objected to these bans and the capacity restrictions. Looking ahead in July, we are scheduling exactly at 50% of capacity. We are going up to the limit. Again, we've written to the ministry that, hey, we'd like to go higher. We are just hoping that the government will stay true to its word, and July 21, they will remove the capacity restrictions. CEOs versus- Let me tell you, we are very happy with the A321 aircraft. It has a unit cost that is 10% lower than the A320. That's a very good thing, and this allows us, therefore, to deploy the A321 in peak demand. In a multiple frequency market, we take the 7:30 A.M. departure and use the A321, and for the other departures, we use A320, and also strong markets we can use the A321. Right now, our utilization is roughly equal, the A321 we use, but really, we'd like to use the A321 a lot more. It's a very efficient aircraft. You said unit cost, which I take it as total cost. Basically, fuel cost advantage is closer to 25, and total unit cost is probably closer to 10. I'm saying A320neo versus A321neo. They're the same engine, so you've got the fuel efficiency, and then the larger number of seats helps you. That's why the unit cost are down by about 10%. [crosstalk] Compared to A320, of course, it's more fuel efficient, but compared to A320neo, it's the same fuel efficiency. Okay, neo versus ceo is another 10%, right? More or less. On fuel itself, it's 15%. Okay, sure. Thanks a lot, sir. Thank you. The next question is from the line of Varun Ginodia, Ambit Capital. Please go ahead. Hello, can you hear me? Yes, Varun, we can hear you. Please go ahead. Can you hear me, sir? Hello? Yes, Varun. You can go ahead. Ask the question. Yeah, sorry. Yeah, sure. Thank you so much for the opportunity. Sir, a couple of quick questions. First question is on your sequential fuel cost increase. We see that the fuel prices are up by 26% sequentially, and your capacity is up by 25%, which adds up to close to 50%. Sequential increase in fuel cost is about 68%. Is there any other reason behind that? If you could just explain that. Second question is on your ceo aircraft, older engine aircraft staging out. That seems to be at a much lower run rate than we would be happy with. If there are any issues with returning those older aircraft? Those are my two questions, sir. Let me take the first question first. You're absolutely right, the published rate and the fuel prices are increased by significantly by 26%. The other added factor which is there is our discounts, which we get on our published rate, is a flat rate. As the prices go up, that percentage impact on fuel CASK becomes higher. That's the impact you are seeing. The increase you're seeing is coming out because of that. Net-net basis, it's all about fuel, which is why the price is coming up. Average available on the year-end results, if we have not been 100% happy with the tempo of lease returns, the time, as we speak right now, we have gained momentum. Was it 23 aircraft which went for lease return, and right now we are already at 40. Because the last year, the major obstacles in lease return was the COVID situation, the situation with the MROs, and the supply chain. All this has eased out, and we're gaining momentum and making good what we had lost maybe in this COVID year at the beginning. Now we are confident that we can finish the backlog, which is still there for us, and continue also this coming year with something like what we have envisaged as lease returns. You will see us pick up in this whole process quarter to quarter going forward. The run rate that we are looking at will be close to 40, 45 aircraft per year. Is that the run rate we will be looking at? Yes, good run rate, yeah. Okay. Thank you so much. Thank you. The next question is from the line of Arvind Sharma from Kotak. Please go ahead. Yeah. Good evening, sir. Can you hear me? Yes, we can hear you. Yeah. Thank you for taking my question. Sir, the question on the fleet part, I think the deliveries are number of 45 per year. What will be the net addition to fleet over FY 2023? Is there a planned number? Our total fleet count will be about flat. We are taking deliveries and returning ceos at the same speed. The total number of seats will go up a little because of the A321. All right. Second question. Sorry, I didn't hear you correctly. What would be the daily cash burn rate in Q4 versus Q3? Sorry, I know you said, but I just missed that number. INR 190 million compared to INR 150 million. All right. Thank you so much, sir. Those were the questions I had. Thank you so much. Thank you. Thank you. The next question is from the line of Achal Kumar from HDFC. Please go ahead. Yeah, hi. Thank you for taking my question, sir. I have two questions, actually. First of all, on the demand, of course, last year, if you remember, and as you just said, the demand is driven by Tear 2, Tear 3 cities. Last year, actually, the fares were quite low, and we had seen some shift from train to plane. Yet it took 8-9 months for the demand to reach about 70%, 80% of the pre-COVID levels. If you see the bigger impact in Tear 2, Tear 3 cities, of course, there's a positive vibe coming from metros. If you see the non-metros like Pune, like Jaipur and other sort of cities are still suffering. How do you see the demand recovery this year? What makes you confident that the demand recovery could reach FY 2021 level in FY 2022? That's my first question. Let me try and answer that. In the first wave, it was a slow build-up and then a slow decline. This one is a sharp build-up, and all the analysts will tell you, it's a bell-shaped curve, so decline will also be sharp. In the first wave, we also had the problem that people were hesitating about not being sure about airline travel. The first few months, they were like, "Wait and see if your friends are flying, what's going on?" That hesitancy regarding airline travel being safe, I don't think is there at all. People are paying attention to the COVID-19 numbers in terms of total terms, "Should I go to the airport? Should I take a taxi," et cetera. Regards airline travel itself, people are confident about airline travel. As COVID cases go up or down, we are really amazed at how strongly correlated it is to demand. COVID cases go up. Demand comes immediately. Equally, COVID cases go down, and therefore, demand goes up just as sharp. We modeled all this actually, and this is what is giving us the confidence that, yes, we will be back to February levels by the end of the year. Rono Dutta, I mean, last year we had a lot of paying passengers shifting because the fares were low, and now the fares are slightly higher. Although the fares are not very high, but the fares are not low enough to attract paying passengers. Don't you think there'll be a challenge in terms of getting the same amount of traffic, although you rightly said in the- Actually, we don't. Because people who are traveling are traveling. They're not being stimulated by low fares or they're sort of discouraged by high fares. There is a pent-up demand, and I will tell you, from the latter half of May to the first week of June, we've seen a sharp increase again. It's very, very sensitive to COVID cases. COVID cases are coming down, and we are absolutely confident that COVID comes down, travel is going to go up, and we can see it before our eyes. There's very little doubt in our minds that as long as COVID is controlled, the travel demand will return quickly. Mm-hmm. Okay. My second question around- We are not clearly audible. Can you please use the handset if you're using headphones? Am I audible now? It was breaking. Okay. Is it better now? Can I- Yeah. Okay. My second question was around the aircraft economics. Of course, as you said that the fuel, of course, they are more fuel-efficient aircraft. If you see in terms of leasing, of course, I mean, the difference is almost double, right? I mean, so looking at net new leases, where do you see, I mean, do you really think, of course, on the profit cases you might get some benefits, but do you really see any significant benefits coming out of this replacement A320 over the A321neo or A321? There are two replacements I think you're talking about. One is the Classic going to the neo, then from the A320 to the A321. I think from the Classic to neo, the numbers are clear to everyone, right? It's 15% lower cost in fuel, it's a good deal. The A321 versus the A320 is also a very good transition for us. The leasing costs are higher, but leasing cost per seat is significantly lower in the A321. Then we have the added advantage that we have a mix of fleet with no complexity around, same pilot, same engine, and yet we can target when we want to use the A321, when we want to use the A320. It's a very good deal for us to have it in our fleet. Thank you, Rono Dutta. Hold on. I wanted to add something. Yeah. I just want to add one more element which would show that the cost savings are even higher. When we go back in production, the saving when you fly 16* a day between Bombay and Delhi, the A321 could reduce it to 14. That saves the money of two flights per day, and that has the same or more capacity. That shows the whole economics will come back in a much better way, visible way, when the demand comes back and production comes back. When Wolfgang says reduce from 16- 14, the important thing is we now have two slots free up for something else if we need to. Okay, next question. Thank you. The next question is in the line of Koushik Somasundar from RWC Partners. Please go ahead. Hi, can you hear me? Yes, Koushik. We can hear you back here, but make sure she comes to the handset phone. The audio is very faint. I just wanted to ask a question on cargo and generally, I think there's quite a good turn this quarter. Koushik, can you please use the handset monitor and turn off the auto? I just wanted to understand on cargo, how much more capacity can be added or shifted? On the capacity before the freighter come online. How much more capacity can we add on cargo? Our freighters are coming next year. In the meantime, we have taken 10 of our airplanes and converted them to cargo and cabin. Those are being used in charters. We're not planning to add to those. We have 10 with nets and safety nets inside the cabin. Those are dedicated to cargo plus we'll have the freighter, but we're not adding to the fleet in the interim period. Yeah. Before the freighter are added, are we going to add more passenger planes converted to cargo or not? We are using our existing fleet, therefore, the cargo in the belly is less because we're not flying enough, right? We carry cargo in belly, we carry cargo in cabin, we have the freighter. The cargo in belly is being suppressed because we're not flying enough. The cargo in cabin, we have 10 airplanes, which we use for charter operations. We're not planning to add to those. We have the four freighters with the first freighter coming early next year. Got it. On the cargo yields, what kind of trend are we looking at? Cargo yields have been very good overall for the past 12 months. At this point, they seem to be flattening a little. As we reported, our overall cargo revenues are up almost 10% year-over-year. Okay, got it. Thanks, Rono. Thank you. Thank you. The next question is from the line of Aditya Mongia from Kotak Securities. Please go ahead. Yeah. Hi, everyone. I had two questions. The first one that I had was more on the share of capacity that IndiGo would be having, let's say, a year or two down the line versus where we are at this point of time. Sorry, the question was here to me. The share of capacity again, can you repeat that? Yeah. In terms of fleet, in terms of capacity, what would be the share of IndiGo, let's say, 12 months down the line or 24 months down the line? If you could give a sense versus where we are at this point of time. With the industry? Are you saying our capacity or the industry capacity? Exactly, the fleet here, your fleet versus the market as such. That is impossible for me to project. We can talk about our own capacity. GoAir is buying airplanes. I don't know what Air India is going to do. Truly, we don't know what the competition is going to do. We can only talk about our capacity. Okay, I got that. The second thing that, so the question that I would want to put would be also on the money that is being raised or is being thought to be raised, given how you are thinking through demand reviving, is it more of an insurance against something bad happening, or do you think that this kind of money, INR 3,000 crores, is actually going to be required? We've had extensive discussions on this at the board level, of course. The fact is, it's hard to predict the future right now. It's a very volatile environment. A third wave of COVID could or could not arrive, so we don't really know. Therefore, you're right, it's mostly an insurance. It's not like we feel like we absolutely need the money, but strengthening the balance sheet is always a good idea. As you know, major corporations in this country and around the world are doing it. It's all an attempt to strengthen the balance sheet even further. Got that. If I may, can I ask one question on the capacity? Sure. You mentioned pent-up demand and that being a possibility, driving volumes, let's say, in FY 2023. I just want to ask you, this is your assessment of where capacity for IndiGo and others is and will be. Is there a possibility of a demand-supply mismatch on the other side? On the other side. The demand is higher, the capacity isn't enough to match up for it. Look, this pent-up demand is a real factor on the table. Let me give you an example. Malé. We used to fly Bombay and Bangalore. We analyzed Delhi and Chennai, and it never worked. Delhi and Chennai, there's nothing of demand. When we come out of this first wave in February, March, and suddenly Delhi and Chennai show immense potential. That to me is an example of where there is a lot of pent-up demand, whether we're talking of international or domestically, travel, there is a lot of pent-up demand. Yes, I think there is a potential that for the industry as a whole, we could be short of capacity as well. We just don't know. Got that. Thanks for your response. Sorry to get back into the queue. Thank you. Thank you. The next question is from the line of Anshuman Basak from ICICI Securities. Please go ahead. Yeah. Good evening. Thanks for the opportunity. I wanted more color on the liquidity streams which are available to us, because last year we had managed it extremely well. This year, you were saying about INR 45 billion of available liquidity which can come from SLB and other measures. A, if you could highlight on that part little bit, what are the avenues under that? Second is that, we have been paying to all our lessors on time. What are the other ways, maybe through some tactical negotiations, et cetera, can we get to some more liquidity? What are the basically liquidity sources available to us at this point of time? If you could share some color on that will be helpful. As I mentioned, we have got this $0.5 billion is what we have a visibility today, and these are clearly on the table. We have already been almost in discussion and closed on a few things around this. Beyond this, there are discussions which are going on, and we continue to explore options beyond this. Credit lines, there are lots of banks we are talking to. There are a few who have turned up, there are a few who we are still talking to, and those have not been considered. Similarly, from financing perspective, we have got something on the table, a few things which we are still discussing with our vendors. On an overall basis, I think we are in a very comfortable position as we talk today because our numbers, along with QIP numbers at the start of the year seems fine for us to carry forward. We are not stopping any which ways to explore more possibilities, and maybe as we go along during the quarter, you'll see us rolling out more numbers beyond the numbers we have already reported. Right. This $0.5 billion is only SLB profit? Is there any breakup of this available? It's a mix of credit lines and SLBs. Right. The last question on that front is, if you could share what is the debt number that we have right now, apart from the finance lease and capitalized leases? It's there in the report we have given. Sure. I'll do. Yeah, you can have a look at it. Okay. That will be all. Thank you. Thank you. The next question is from the line of Pulkit Singhal from Morgan Stanley. Please go ahead. Hi, team. Thanks for the opportunity. The first question is on the cargo side. Could you talk a little bit about what kind of industry growth do you expect in cargo, and what sort of a market share will IndiGo have within that with the cargo planes coming on board? That's the first question. I don't think we have the answer on the market share yet. Just to tell you what's happening on cargo. The overall dynamic is that there used to be a lot of wide-bodies flying around in India and outside India, which used to carry a lot of cargo capacity. Since these wide-body counts have gone down, that's why there's a demand for cargo traffic, and that's what we are tapping into. It's not only domestic, it's also international. For example, traffic from Vietnam or Bangladesh trying to go to the Middle East, it used to go on the wide-bodies before. Now it is coming through India, say on our narrow body. That's where we are seeing a lot of growth. Really, the wide-body capacity going down that is creating this generation. It's not like cargo traffic overall has improved, but the mode of transportation is shifting towards narrow bodies. Market share data and all that, frankly, we do not have. We're doing a study on all that and looking at all the opportunities. We've done our first step in terms of the four freighters, but we have a broader study going on a long-term strategy plan for the cargo business. Also linked to that, is there a risk then the cargo use drops once the environment normalizes? Almost every airline is focusing a lot on cargo, and in a normal environment, I would assume the wide-body planes will also come back. Is there a risk on the cargo yields that we are seeing today? Again, with the wide-body planes, I travel across the world, right? Before they used to be carrying a lot of one-stop traffic. Let's take an example of the Middle East carriers. They used to carry passenger traffic from the U.S. to the Middle East to India. Now that is coming nonstop from the U.S. side. The one-stop traffic is in trouble. I don't see the wide-bodies coming back in the same sort of magnitude as they were before. I think this is a permanent shift in my mind. Thanks. That's helpful. The second question is on the regulations in India. This time in the downturn, we're seeing the regulators step back in. In your view, when do you see regulators pull back? Is there an understanding with the industry that once we go back to pre-COVID levels, then the caps and the fare floors and all those things will go away? I think the minister, Mr. Puri, has been quite articulate in that regard. He has said consistently that this is a temporary measure. We want to get out of any kind of regulation. He says that in every public speech he makes. Right. That's helpful. Thanks. That's all my time. Thank you. The next question is from the line of Pragya Damodaran from UTI AMC. Please go on. Yes. Thank you for taking my question. Sir, in your opening remarks, you did mention that in the near term, the international segment, there's a lot of uncertainty in that segment. Over a longer time period, what are your plans for expanding your business in the international segment in terms of adding new destinations and whether it's long-haul or short-haul? Also, if you could give a sense about the profitability of your international business versus domestic, and how do you see that going forward? Thank you. Let's go back to the pre-COVID period and start from there as a benchmark. In the pre-COVID period, we were expanding international aggressively, and international was accounting for 25% of total capacity. It also had higher margins than domestic. High growth, high margins, which is a wonderful combination to have. That's why we were very bullish in terms of international expansion. Now, our plans are already there for doing that. Our fleet is in place to do that. As soon as this COVID crisis is over, we plan to sort of restore our original growth path in terms of international. Let me say that we talk about this wide-body competition decreasing, especially during this COVID, we are getting charter demand from such esoteric places, if you will, which is giving us a very good sense of the traffic, which was being carried before one stop to other hubs, which we can now carry non-stop. Our growth plan again is in that six, seven hour range from Delhi, Mumbai, Chennai, Bangalore, Kolkata, and every major city in that circle falls into our potential market. It is being delayed, of course, because of COVID. There will have to be some sort of understanding between governments about travel through the passports or some way of shape or form. Once all that sorts out, I think we'll be going into international markets with rapid growth. Again, as I said, pre-COVID, our international margins were higher than the domestic margins. Sure. Thank you for that answer. Thank you. Thank you. The next question is in the line of Rahul Rathod from IC Technicals. Please go ahead. Good evening, everyone. Sir, just a couple of questions. My first is with regards to the asset. Come closer, please. My audio, ma'am? Try again. Go ahead. Are you using an earphone, sir? Please raise your hand for it. Is this better? Yes, much better. Yeah, thanks. From what I see in the balance sheet, we got a INR 145 crore asset held for sale. If you could just give some sense of what it is and if we are expecting INR 145 only or there could be some upside to it? This is basically one of the plane engines we had, which is already the agreement was signed, and it has not yet been converted into an SLB. That has been shown on 31st March as asset held for sale. There's nothing more beyond that. This was a transaction which happened, which we've not completed at the end period. Okay. My second question is with respect to the tax credit that we don't have, we are not carrying for the last four quarters. We are almost at 0% tax credit. Will this be used against the liability that could come up in Vivad se Vishwas? I'm not clear on the question. Tax credit. Can you just elaborate on that question, please? No. What I'm trying to understand is that Vivad se Vishwas, we have said that the liability could range from INR 4,500 crore to INR 4,000 crore. I'm seeing that no tax credit in terms of the loss, no tax credit is being carried forward, which could be used later for our. Let me try and understand this question. You're saying, because of Vivad se Vishwas, I'm not charging any tax amount into my P&L. Is that the question? Yes, I'm just trying to understand whether the tax credit is being adjusted with the Vivad se Vishwas and we not really have any tangible cash outflow. That's what I'm trying to understand. Let me explain you. With 2008, 2009 assessment year, we had losses, and those losses we have set off against future profits. What has happened is our reduction in losses has actually got offset with the MAT credit, which we have written off subsequently, which otherwise we would have had to charge it into the P&L. Looking at if in a normal circumstance, if we had just taken this year to year, and even agreed on that, we would have had to pay some cash flow today. However, because of the write-off which we had taken on MAT credit, I think RKL, that sets off my profit, which results in no outflow for the company. Okay. These last three, four quarters, the tax rate that we have seen, there's no tax credit being carried forward. Any particular reason for that? We don't have any visibility as of. We normally look at one or two years. Right now, we are in a situation where the future profitability and future revenues are under the COVID. Everybody is looking at that. You assess it every quarter and take a charge into the books as per that. The current situation is that we are into COVID, we are in some losses, so we are being more pessimistic, and we are not recording any income on that. All right, sir. Thank you. Thank you. The next question is in the line of Prashant Kothari from Investec. Please go ahead. Yeah, hi. My question is around the liquidity situation again. I'm just wondering, how did you guys come up with this number of INR 30 million? I mean, is there some kind of rule, some formula which kind of helps you to think about how much liquidity we need on the balance sheet? Also kind of as a corollary, as we keep growing our scale, will we need more cash on the balance sheet? Think of free cash, or do we think of free cash less the debt we have? How do you think about these things? Thank you. How did we come up with the number of INR 3 million? We have a worst-case scenario of how low could the cash go, and we also have a number in mind of we are not willing to tolerate the cash from dropping below this level. That level actually compared to most of the airlines is quite high. We are pretty conservative that we need a minimum of this amount of cash. Now, frankly, we don't have any scenario which says we go below that. We've done a pessimistic scenario, blah, blah, and it still is just above there. The question that the board asks is, what about extreme cases? What if there is a third wave COVID-19? What if there's another three months shutdown? What if international doesn't open for two years? Those truly are extreme cases, which no one can model, frankly. It's against those extreme cases that we think, let's have this cash balance as insurance. It's almost like a disaster risk insurance, if you will. Beside all that, we think it's a good idea to have a lot of cash on our books. We want to have a strong balance sheet. We're going to do everything to make sure the cash liquidity comes from revenues and not anything else. If the revenues were to shut down completely for whatever reason, we still want to have a strong balance sheet. We came to that answer of INR 3,000 crore based on that. What is the worst-case scenario that we can think of? We still want to have a certain amount of cash, and therefore, we came up with this number. It really is disaster risk insurance. Right. Is it that you think about free cash on a gross basis or on a net basis, like free cash less debt you have? Free cash is the cash which is available for us to spend. That's the way we look at it. Now, I'm not sure when you say net basis or gross basis. Yes, free cash also takes care of when I look at my current liability, which I need to pay next three months. That we obviously keep in our mind. But that free cash takes care of that. When I look at my balance sheet on a particular date, we have that visibility that how much it will cover from that day onwards. For us, free cash is the cash which is available for us to use any point in time. Did I answer the question? Okay. Thank you. Thank you. The next question is from the line of Pulkit Garg from Goldman Sachs. Please go on. Sir, thanks a lot for taking my question. Sir, a couple of quarters back, you used to talk about where our cash burn would be. You did speak about the INR 19 crore odd, which was the cash burn in the March quarter. Any guidance of what the numbers could be for the next couple of quarters, your daily cash burn? I don't remember giving that guidance, and frankly, the answer is I don't know. It'd be very speculative to give that number, frankly. Absolutely. You cannot give a guidance for cash flow going forward. Obviously, the COVID situation, the revenues are now not there. We have already called out that we expect that our cash burn is going to be higher in this quarter, at least. Sure. You used to say that it was about INR 40 crore a day, which you would bring down to about INR 30 crore. My second question is related. Can you give a sense of what levers of cost cuts do we have? As you rightly highlighted, nobody knows if there's going to be a third wave or not. What other levers do we have in terms of cutting costs further, assuming a worst-case scenario of this thing prolonging? Look, fuel is obviously our biggest line item, and just reducing fuel consumption is a big thing for us, so we are focusing on that. Employee cost, unfortunately, we've taken a lot of pain already. As you know, we had a layoff, we had pay cuts, then we did another leave without pay. I mean, the amount of further pain we can tolerate in that is very minimal. We are looking at every other opportunity, including, of course, aircraft ownership costs, talking to the lessors, seeing what sort of deals we can get, and then all the other non-discretionary costs. Everything that we have, we are cutting back on. I won't hold our breath in terms of we have major opportunities to reduce our unit costs further. What we need to do is get the airline going and get more on the revenue side, frankly. Fair point, sir. That answers my question. Thank you. Thank you. The next question is on the line of Sonal Gupta from HSBC Mutual Fund. Please go on. Yeah. Great. Thank you so much for taking my question. First, I just want to understand in terms of the, I mean, given the sale and leaseback that you get on these new planes. I mean, even if the plane is standing for a year, does it still make sense for you to take a new plane? I mean, I'm coming in context to the fact that lastly you had guided for a flat fleet count and fleet count has grown by 9%. Just trying to understand that. The answer is yes, we've looked at all that very carefully. No matter what scenario we look at, we say it's better to take the airplanes now. It's not like, oh, in six months we start losing on that cash that we got. No, it's a much longer term than that. Right. Just my second question, I had a similar question last quarter was, given that the industry scenarios and the demand, like you're saying, is not really getting stimulated, it's more of people who want to fly are flying. What is the ability do you see to raise yields, especially in the scenario that, historically we used to operate at 85% load factor, but maybe for the foreseeable future, we'll have to probably do a 75 or something. In which case, are we going to adjust the yield to at least get a commensurate level of profitability at that sort of load factor? I think yields in India are really the lowest in the world, practically, and lower by about half. Average fares for a low-cost carrier like Spirit or Southwest in the U.S., it is $130, $140. In India, it's like $60. Yet our cost structure is on aircraft and fuel is the same. We don't have much room to go down, frankly, without more blood on the streets and more airlines collapsing. There's all the issues of middle-class growth, of people substituting from rail to air, et cetera. I think over time, not in large numbers, but I think we can expect to pick up loads. Okay, great. Thank you so much. Thank you. The next question is from the line of Ankush Sharma from HDFC Life. Please go ahead. Hi, good evening. I have just one question. On the employee cost, when I look at your capacity, there's a 25%-26% increase quarter-on-quarter, but the employee cost is kind of at the same INR 735, INR 740 number, both in Q3 and Q4. If you could help me understand what's going on there, and also for 2022, what's the kind of number you're looking at on an annualized basis? Thanks. Okay. I'm not sure I understood your question, but to the extent I understand it, on employee costs, what has happened, as you know, first of all, we took a 15% layoff, and then we all took severe pay cuts, and then we all added this leave without pay. Year-over-year, employee costs are down about 30%, and that's stabilized, and it's stayed there. There was a second follow-on question. I didn't follow that. No. My question was, despite an increase in capacity in Q4 by about 25%, your employee costs are flat on a Q-on-Q basis. Why is that? Is it because you've not taken any hike or are they at the same levels as Q3? What will be the number you're looking at for FY 2022 on a full year basis on employee costs? Yeah. For the following year, the first thing we'll probably do is get rid of the leave without pay. Then gradually we'll bring the pay cuts back. It's impossible for me to predict what the number will be, but it will still be lower than before. The 30% is not sustainable. We need to climb back up, but I don't have a forecast for where to end up. Okay. The question on the Q4, it was flat because obviously we did not reinstate the cuts which we had done, so they could continue. Okay. Understood. Thanks. Thank you. Ladies and gentlemen, that would be our last question for today. I would now like to hand the conference over to Mr. Rono Dutta for closing comments. Thank you, and over to you, sir. I just wanted to conclude by talking broadly about what is the situation we find ourselves in. Many people have asked me, why are you so optimistic about IndiGo? I just want to highlight why that is. Let's look at the broad drivers of our performance. First is fuel. Fuel, as you know, is our biggest cost item, and our cost per flight hour is down 10%. That's a big deal, I think. It will continue to get better as we take more and more yields. You take cargo. Cargo was always a small item on our P&L, it's becoming a bigger and bigger piece, and that again, is a structural change that is here for some time. Yields, as I said, yields are very low in India, and I don't expect to see a dramatic change, but yields can only get better over time. The A321 is camouflaging all these statements. The first three you can see in our statements. You can't see the A321 effect. Again, the A321 effect is driven by two things. It is more efficient cost-wise, and it allows us to, in a very targeted way, to fly on the right planes. There's the quality of flying and customer service that we are offering. We are number one in OTP by far. Our complaint ratio is the lowest it's ever been. Our Net Promoter Scores are high. All the broad matrices of performance are in the right direction. There's only one negative, and the one negative is that there are not enough customer load factors. Now, the positives that I talked about are all structural. They're here to stay and probably get better over time. The one negative, which is the customer loads, is a very short-term cyclical factor. It is going to reverse, and when it reverses, the structural advantages to customer loads in terms of, as you said, railway substitution, middle-class income growth, et cetera, will show up. There's only one thing we're waiting for, and that's for the load factors to improve. We all know they're going to do so at some time. Overall, I really think this is almost like a Cinderella moment for IndiGo, where, yeah, the bottom line looks ugly, but very soon things are going to get a lot better. Thank you. Thank you very much. Ladies and gentlemen, on behalf of IndiGo, that concludes today's call. Thank you all for joining us. You may now disconnect your lines.