How big will the forex impact be amid West Asian turbulence? – Firstpost

IndiGo, India’s largest carrier, may well be headed for a loss after two consecutive years of bumper profit. The airline will declare its results for Q4-FY26 and Full year FY26 on Friday, May 29, 2026. This comes amidst a change in the corner office with Pieter Elbers no longer leading the airline and the next CEO, Willie Walsh, yet to take charge. Promoter and MD Rahul Bhatia is currently heading the airline. The announcement of results will lead to a culmination of what was a turbulent year in Indian skies, which has continued onto the next financial year.

IndiGo had recorded a bumper profit of Rs 3067.5 crore in Q4-FY25 powered by the once-in-a-lifetime Kumbh Mela, seeing additional capacity with high yields being deployed. This also powered FY25 to a profit of Rs 6808.6 crore, its second highest in history.

Compared to that, the airline has a profit of Rs 143.3 crores on a cumulative basis in the first three quarters of the financial year. With March seeing a dip in international traffic as most of the Middle Eastern network remained wobbly, the indicators are all for a loss.

Over the last year, the airline has focused on forex losses being called out separately, an indicator of how the airline is performing well but the currency fluctuation is not helping the airline attain profit. This year, the currency fluctuation was steeper.

How are the numbers stacked up?

IndiGo had a muted Q4 this financial year, with domestic departures being down 3.2 per cent while capacity by ASK was up by 1 per cent. This was mainly due to the airline inducting more A321neos and phasing out A320neo.

However, on the passenger front, there was no growth, with a dip of 0.9 per cent in domestic traffic. The story was the same for the full year FY26, with departures down by 8.4 per cent, and capacity by ASK down 5 per cent. IndiGo carried 6.3 per cent fewer passengers in FY26 over FY25 on the domestic front.

IndiGo’s attention has been international over the last few years. Last Financial year, it inducted the damp-leased widebody aircraft from Norse Atlantic, with six 787-9 Dreamliners joining the fleet eventually. For the financial year, international departures grew nearly 10 per cent, with an increase in capacity by ASK being 16.3 per cent.

IndiGo carried 9.2 per cent more international passengers in FY26 over the last financial year. This number would have been more had it not been for the middle eastern conflict, where in Q4 the airline saw a drop in departures by 3.2 per cent as nearly the entire gulf market was impacted. This led to a drop of 2.4 per cent in passenger numbers.

Sliding rupee, Rising oil the main challenges

There are two other parameters that will impact IndiGo’s profitability, both of which go beyond the usual demand-supply dynamics and both beyond the direct control of the airline.

Oil prices and depreciating rupee. Rupee depreciated 4.9 per cent from the first day of the quarter in January to the last day of the quarter in March. The rupee depreciated a steep 10.3 per cent between April 2025 and March 2026. For comparison, the depreciation was only 2.57 per cent over the previous financial year.

The depreciation of the currency impacts the lease costs, which are dollar-denominated. In November 2025, the CFO of the airline had pegged the loss of Rs 900 crore for depreciation of one rupee. IndiGo’s lease rentals are dollar-denominated, and while it has started working towards moving planes to finance a lease from an operating lease, there is a long way to go for this to materialise fully.

What to look forward to?

In the current environment, what guidance does the airline give on capacity increase and the status of its grounding, which should have been zero by now had it not been for the delays from Pratt & Whitney would be interesting to know. The airline has shrunk its international exposure significantly as the Pakistani airspace closure and the war in West Asia leave it with no options to continue flying to Tashkent, Almaty, Baku amongst others and a reduction in services to the Middle East itself as it has to adjust based on the security situation which develops and changes with every day, limiting the forward sale of inventory.

The post-result call would see the management give a commentary on what it expects, the benefits it has so far accrued from hedging oil, as well as the plan forward. With a 63 per cent domestic market share and one of the top 10 airlines globally, IndiGo would have to make its way amidst the headwinds carefully.

As the rupee depreciation started, the airline also started reporting its numbers without the forex component in place. While it gives great insights into the finances, in the end a loss remains a loss. All indicators are for a quarter where the airline suffered a loss. How much would it be, and what are its plans to mitigate the current quarter and year that will drive the share price for the airline? Its share price has eroded by 17 per cent as of today, as compared to last year.