Will IndiGo clock the highest-ever profit by an airline in India?

Indigo

IndiGo, India’s largest carrier by fleet and market share will declare its third quarter FY24 earnings on Friday, February 2. The timing is interesting since it comes within days of the airline starting to withdraw some of its A320neo family planes and making adjustments to accommodate the additional groundings. However, the results will be for a time that saw the highest traffic in India. Apart from the year-end holidays, the biggest driver was the cricket world cup final in Ahmedabad, which saw sky high fares and occupancy.

The results come after the announcement that the airline had achieved another feat, of ferrying 100 million passengers in the calendar year—it is chasing the same number this fiscal year. The airline had earlier said that it would be inducting a mix of wet and dry leased planes to tide over the aircraft shortage. While the wet leased planes are in operation, the dry leased planes are yet to be inducted.

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What do the numbers say?

At 2.43 crore domestic passengers, the quarter has seen sequential growth of 4 percent, but year on year, the growth is 22 percent (compared to Q3-FY23). This also makes it the best ever quarter in terms of traffic in the history of IndiGo, overtaking the Q1-FY23 quarter, when the airline carried 2.34 crore domestic passengers. IndiGo closed the quarter with a domestic market share of 62.1 percent, losing 1.3 percent over the previous quarter but 6.4 percent more than the same quarter last fiscal.

The airline is estimated to have carried about 31 lakh international passengers in the quarter, its highest ever. The final numbers are awaited from the regulator.

On the cost side, ATF prices had reached another high when the quarter began in October, only to slide over the next two months. The impact of this would have been lower for the airline as it raised fares by adding a fuel charge, which was withdrawn in the first week of January. ATF prices were 8-10 percent lower in the October-December quarter in 2023 over the same quarter in 2022. The dollar-rupee conversion rate has remained constant for the entire quarter. On a yearly basis, the change has been a more manageable 2 percent.

Record profit?
Q1-FY24 saw the airline report a profit of INR 3,089 crore. Q2, traditionally a weaker quarter, saw IndiGo report a profit of INR 189 crore. In Q3, with the highest-ever passenger numbers, a strong season with considerable yields and load factors, along with diversification on international routes, the airline looks set to cross the INR 17,000 crore revenue mark from operations for the first time and record the highest-ever total revenue in its history.

Tail Note
Competition is heating up, especially from Air India Express, which is inducting planes at breakneck speed. Hitherto, IndiGo has never seen such a competition since its inception in 2006.

With profit a certainty and a record profit a very high possibility, IndiGo is on the path to closing the financial year with a profit never before seen in Indian skies. The airline had closed FY19 on a profitable note before being hit by the pandemic. Since Q4-FY20 until the last quarter, despite the record profit in Q1-FY24, the airline had a consolidated loss of INR 9,904 crore. This will be the fifteenth quarter since COVID started.

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With over 80 aircraft to be grounded due to Pratt & Whitney engine issues, the airline has remained silent on the compensation, which could potentially help it recover the consolidated losses. All eyes now shift to the evening of February 2, when the management will talk about its plans and the last quarter’s profit.

Indigo's Performance