IndiGo parent faces earnings estimate cuts amid cancellations, rupee weakness

IndiGo share price

A weaker rupee, coupled with ongoing disruptions and widespread flight cancellations at IndiGo, has prompted analysts to sharply cut earnings forecasts for InterGlobe Aviation. Since late November, IndiGo has cancelled hundreds of flights, with the situation deteriorating further over the past four days. Airports nationwide have seen chaotic scenes as anxious passengers scrambled for information and travel plans went into disarray.

Industry experts say the turmoil comes at the worst possible time. “This is supposed to be the best period. December and March are the strongest quarters,” one aviation analyst said, warning that continued cancellations could shave 5–7 percent off IndiGo’s topline on a quarterly basis.

The strain is already visible in the company’s numbers. InterGlobe Aviation reported a net loss of Rs 2,582.10 crore in the September quarter of FY26, widening from Rs 986.7 crore a year earlier, largely due to currency movements linked to dollar-denominated future obligations. Lease costs soared more than tenfold in the quarter as the rupee weakened against the dollar. The airline said a 1.7 percent depreciation in the rupee triggered a forex loss of Rs 2,892 crore, compared with Rs 240.6 crore in the same period last year.

Citi expects IndiGo’s operations to normalise over the next month as the airline rolls out corrective measures. However, it cautions that the combination of a weakening rupee and rising aviation turbine fuel prices could further erode profitability in what is traditionally a strong third quarter. Fuel accounted for 27 percent of IndiGo’s total expenditure in the September quarter, and ATF prices have risen 10 percent since early September. Citi also notes that IndiGo’s vast and complex network makes it more susceptible to cascading disruptions.

Morgan Stanley shares similar concerns. The brokerage warns that the rupee’s depreciation will inflate fuel and maintenance bills, adding to the burden of rising jet fuel prices. It says India’s new pilot fatigue management rules have pushed IndiGo’s operations into turmoil, revealing the challenges of adapting to stricter safety regulations. IndiGo has acknowledged that inadequate preparation for the revised roster norms — phased in through 2024 and fully implemented from November 1 — contributed to this week’s disruptions. “Lack of proper planning ultimately led to disruptions this week,” the airline admitted.

With the new rules in place, Morgan Stanley estimates that pilot salaries — already accounting for nearly half of total staff costs — are set to climb further. The brokerage has cut its FY26 and FY28 earnings-per-share estimates by 20 percent each and trimmed EBITDA forecasts by 1–4 percent, noting that improved yields will only partly offset higher staff expenses. Even so, it adds that these cost pressures are not unique to IndiGo; tight industry-wide capacity may push airfares higher, offering a partial cushion.

Market experts caution the earnings impact may persist. “The current debacle and chaos at IndiGo is going to impact earnings,” said Kranthi Bathini of WealthMills Securities. “They also need to win back customer trust — that is crucial in the short to medium term.” Bathini added that rupee depreciation presents a “double whammy” for the airline. “By and large, the current cancellations and inoperation are going to hit revenues this quarter,” he said, advising investors to avoid the stock in the near term as it remains in a downtrend.

IndiGo’s management, meanwhile, has been trying to strengthen its natural hedge against currency swings. In the September quarter, CEO Pieter Elbers said the airline was accelerating its “internationalisation” strategy by expanding into routes that generate revenue in euros, pounds or dollars — a buffer against rupee volatility. “This provides us with a natural hedge against currency fluctuations,” Elbers said.

Revenue in the September quarter fell 10 percent sequentially to Rs 18,555 crore. International operations helped offset a slowdown in domestic traffic during a seasonally weak period marked by weather disruptions and geopolitical tensions. Excluding the impact of forex movements, IndiGo reported an operational profit of Rs 104 crore, compared with Rs 2,347 crore in the June quarter and a loss of Rs 754 crore a year earlier.

Elbers noted that there was a small positive from hedging against the dollar but said losses arising from currency fluctuations and dollar-denominated lease obligations pushed the airline from an operating profit into a net loss. IndiGo has now revised its capacity guidance to the “mid-teens,” an improvement over the “double-digit” growth it had projected earlier. Optimised capacity deployment, he said, has already enabled a 10 percent revenue increase and an operational profit of Rs 104 crore, excluding the impact of currency movement, compared to a loss last year.