Last Updated: May 11, 2021, 0930 hrs
On May 10th the board of directors of InterGlobe Aviation Limited , which operates the India’s largest domestic low cost airline IndiGo has approved raising upto ₹3,000 crore through a Qualified Institutions Placement (QIP) process.
This was decided as the airline suffers with liquidity because of the fall in passenger demand amid the increasing cases of COVID infections. The ultimate goal was to increase liquidity of the airline which included raising funds by method of QIP.
InterGlobe Aviation Limited’s board had earlier on 7 May met to consider raising funds through a QIP process.
QIPs are a way to issue shares to the public without going through standard regulatory compliance.
Interestingly, IndiGo had earlier in January shelved plans to raise funds up to ₹4,000 crore through a qualified institutional placement (QIP), opting instead to raise money through sale and lease back (SLB) transactions and other alternative options.
The airline has since then carried out SLB of a few of its aircraft. SLB is a transaction in which the owner sells the aircraft, and then takes it back on lease from the buyer. Such a deal typically removes the aircraft, and its associated debt, from the carrier’s balance sheet.
Even thought the crisis will impact the airlines, as per various reports Indigo will be the airline to emerge out of the COVID crisis stronger than other airlines because of its stronger balance sheets.