IndiGo grew revenue by a quarter but still lost ₹1,879 crore as jet fuel costs rose 67%. Its new CEO said he had never seen a fuel price surge like this in 47 years in the industry. The results also disclosed that the airline chose not to join the government’s fuel price stabilisation scheme.
InterGlobe Aviation, which runs IndiGo, reported a consolidated net loss of ₹1,879 crore for the September quarter. That is smaller than the ₹2,582 crore loss a year earlier, but much larger than the ₹237.6 crore loss in the June quarter. It is the airline’s second consecutive quarterly loss.
Revenue rose strongly. Revenue from operations increased 25.9% to ₹23,364 crore, and total income was ₹24,312 crore. Total expenses rose to ₹26,188 crore, and fuel was the main driver.
Fuel costs
IndiGo’s fuel bill rose 67.2% to ₹9,967 crore. Fuel accounted for about 38% of total expenses in the quarter.
Willie Walsh, the former British Airways and IAG chief who became IndiGo’s CEO on 3 August, said on the earnings call that in 47 years in the industry he had never seen such a surge in aviation fuel prices. He said fuel had risen to more than 60% of operating costs at some airlines globally.
The rupee is the second problem. Walsh said 50–60% of IndiGo’s non-fuel costs, including aircraft leases, engine maintenance and parts, are in dollars. With the rupee near 95 to the dollar, those costs have risen sharply in rupee terms. Excluding the effect of currency movements, IndiGo lost ₹723.7 crore, compared with a profit of ₹103.9 crore a year earlier. So even before currency losses, fuel turned a profitable business into a loss-making one.
IndiGo’s financial statements disclosed that the airline chose not to join the government’s aviation fuel price stabilisation scheme, introduced to help carriers through the fuel crisis.
That is unusual for an airline losing money. The disclosure did not give a reason. Such schemes usually come with conditions, often limits on fares or requirements to maintain certain routes or capacity. IndiGo appears to have decided that keeping control over pricing and capacity was worth more than the fuel support. That suggests management expects to recover costs by managing fares and capacity rather than relying on government assistance.
Demand is slightly weaker
Passenger load factor, the share of seats filled, fell to 80.3% from 82.5%. Higher fares are reducing demand slightly. Walsh said capacity cuts and yield management helped revenue but only partly offset higher costs.
The airline gave cautious capacity guidance for the December quarter. Last year IndiGo was expanding quickly. Now it is keeping growth limited to protect fares. That matches what ITC Hotels said earlier this week about domestic air traffic slowing in August and September.
IndiGo’s fleet was 442 aircraft at the end of September.
What it means
IndiGo is India’s strongest airline. It has about 60% of the domestic market, the lowest costs and a large cash balance. If it is losing money, the rest of the industry is likely under more pressure. Smaller airlines with weaker balance sheets will struggle more.
For travellers, it means fares are likely to stay high. With fuel this expensive and the market leader limiting capacity, airfares during Diwali and the winter holidays are unlikely to fall. Much depends on oil prices and the Gulf.
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