MakeMyTrip is hoping international flights will start from July⁠— but it is also preparing for many quarters of big losses

• For the first three months of the year, MakeMyTrip has reported a 15.9% fall in revenue to $137.2 million from $163.3 million in the same quarter the previous year.
• While MakeMyTrip’s numbers for Q4 show the impact of cancellations from February, the real dent will be seen in the current quarter.
• The company has a liquidity of nearly $168 million as on 31st March which will help them survive for two years.

India’s leading aggregator MakeMyTrip is hopeful that with domestic travel opening up and the possibility of international travel opening after July, the worst is over.

Mohit Kabra, Chief Financial Officer of MMT during an earnings call said that over the next few quarters they will bring down the losses to the $10 million range before targeting breakeven.

For the first three months of the year, MakeMyTrip has reported a 15.9% fall in adjusted revenue to $137.2 million, compared to the same quarter the previous year. The NASDAQ-listed company also posted an adjusted operating loss of $10.3 million.

However, Kabra told analysts that between April and June 2020, the loss balloon to the $20 million range.“The quarterly run rate on fixed cost has been brought down from almost like $45 million/$50 million to less than $30 million. And therefore, we do expect that we will be able to keep the burn into the 20s, if at all, during the first highly impacted quarter,” he said.

Kabra added that because of the coronavirus pandemic there has almost been “a reset of the business”.

From airline companies to hoteliers, most do not expect an immediate revival in international tourism. In fact, hotel chains like OYO and Mahindra Holidays do not see much air travel even within countries. Instead, they expect people to choose destinations that they can drive to, in order to avoid the risk of infections and quarantine.

Stowing cash for times are getting worse

While the company has taken several initiatives to cut costs and also cut down on marketing and promotional activities, it still has a long way to go as the future for travel and tourism still looks grim.

However, Kabra said that the company has enough in the money in the bank to last two years.

“We believe our liquidity of nearly $168 million as on 31st March, along with the cost optimization initiatives that I've talked about, will provide us a runway of almost two years, even if travel demand is not restored due to unforeseen worsening of the current situation. While a zero revenue scenario is unlikely beyond a quarter or two, we feel it is prudent to be geared up for a longer period given the uncertainty of the pandemic and to be able to survive with the available cash,” said Kabra during the call.

During this time, the company’s top management let go of its salary for the entire year. But even then, the company ended up firing 350 employees.

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