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IndiGo reported a loss of Rs 2582 crores in Q2 last fiscal, which was the quarter immediately after the crash of AI 171 impacting traffic
IndiGo, the largest carrier in India, is set to declare its Q2-FY27 and H1-FY27 results on Thursday. The quarter was a turbulent one, very much in line with the first quarter. The airline had reported a loss of Rs 2582 crores in Q2 last fiscal, which was the quarter immediately after the crash of AI 171 impacting traffic. IndiGo closed Q1-FY27 with a loss of Rs 238 crores.
The quarter started with IndiGo pulling out services from six international destinations temporarily, and has not returned to Ho Chi Minh city in October as planned, instead consolidating services at Hanoi. The airline had also reduced services on domestic routes to adjust to the demand. The quarter also saw the announcement of return of damp leased Dreamliners with the services now withdrawn completely.
The airline operated 6.3 per cent fewer departures in Q2-FY27 compared to the same period last year. The decrease was more on the international side which saw 8.2 per cent fewer flights while domestic flights saw a decrease of 5.8 per cent. Interestingly, the capacity by ASK (Available Seat Kilometers) remained flat with a decrease of only 1.1 per cent compared to the same quarter last year. This was largely driven by the Dreamliners plying to Europe doing the heavy lifting while on the domestic front, the induction of A321neo as replacement of the A320s added to the capacity. The impact on passenger numbers was in line with reduction in departures with the airline carrying 6.5 per cent lower passengers. However the shrinked schedule allowed the airline to either bench the older generation aircraft or utilise them sparsely to avoid the higher cost due to increased fuel prices. The induction of A321neo helped have similar capacity at lower departures helping reduce the cost at unit level and have fewer trips which are made.
More from BusinessThe rupee saw a slide of 1 per cent this year between July and September, while the slide was 4 per cent last year. However, when compared against the previous year, Rupee is down 8 per cent to USD. A significant portion of costs for an airline in India are dollar denominated including leasing and a slide causes immense pressure on the balance sheet. IndiGo’s stock price has seen a drop of 5 per cent between end of February when the West Asia conflict ended and October 27, 2026. During the same time, the benchmark NIFTY 50 saw a drop of nearly 10 per cent. SpiceJet is the only other Indian carrier which is listed.
Market leadership continued
IndiGo recorded its best ever domestic market share in July with a 67.4 per cent slice of the domestic market. It has continued to operate with high market share for most of this year and the quarter for which results are being declared was no different. While IndiGo shrunk, the fact that Air India group shrunk even more helped IndiGo maintain the higher market share with Akasa Air being the only real contender as SpiceJet went down to very low market share. Akasa Air does not have the capacity to challenge IndiGo on multiple routes simultaneously.
The airline had a mind boggling revenue side of things in Q1, which weren’t enough to record a profit. All indications are that it has fired on all cylinders on the revenue side in Q2 as well, though costs have further ballooned.
Glimmer of hope?
The airline has passed on the higher cost to the flyers in one form or another. From introducing fuel surcharges to a general increase in fares, the quarter has seen considerably higher fares than the previous ones. However, that is just one side of the business. Have the fares been high enough to cover for the higher costs amidst global challenges like airspace closures, high price of ATF and depreciating rupee?
The airline would do good if it curtails its losses significantly when compared to the same quarter last year. The income from grounding of planes, which the airline classifies as Income from Operations, along with the shift from operating lease to finance lease would be looked at with keen eye. This also is the first results under its new CEO Willie Walsh, who took over the reins on August 03.
IndiGo could report record RASK (Revenue per Available Seat Kilometer) and Yields, but those may not be enough to turn a profit. All eyes would be on the post results management call where the new CEO would speak for the first time and focus on costs, especially after the widebodies have been returned which could lead to significant savings in the October to December quarter and beyond.
