IndiGo airline swings into the red with Rs 987 crore loss, first in two years

IndiGo had reported a profit of Rs 2,736 crore on sales of Rs 19,570 crore in Q1 FY25.

InterGlobe Aviation Limited, the operator of IndiGo airline, on October 25 reported net loss of Rs 987 crore for the quarter ended September 30, 2024. It reported net profit of Rs 189 crore in the year-ago period.

On October 25, IndiGo's shares on BSE closed trading 3.2% lower at Rs 4,373.7 apiece.

The fall in IndiGo's bottomline happened despite a 13.6 percent rise in its revenues to Rs 16,969.6 crore during the quarter as a 41 percent jump in airport fees and charges coupled with a 29.6 percent rise in supplementary rentals and aircraft repair and maintenance fees and a 12.8 percent rise in aircraft fuel expenses hit the airline's operating profit in July-September.

In Q2FY25 IndiGo's aircraft and engine rentals costs also rose nearly four times to Rs 763.6 crore from Rs 195.6 crore a year ago.

When compared year-on-year, ATF prices in July 2024 stood at Rs 96,148.38 per kilo litre, nearly 6 percent higher at than Rs 90,779.88 per kilo litre in July 2023. Similarly, jet fuel in September 2024 stood at Rs 93,480.22 per kilo litre, 16.8 percent lower when compared to Rs 1,12,419.33/kl in the same period in 2023.

CEO Pieter Elbers told analysts during the earnings call that the airline had reached a peak of mid-70 AOG (Aircraft on Ground) in July-September, however the situation has since then improved and AOGs are reducing. He cited the reason behind the loss in Q2FY25 to grounded aircraft and a rise in fuel costs.

Furthermore, IndiGo's yield per passenger fell to Rs 4.55 per kilometre in the September quarter from Rs 5.24 per kilometre in the June quarter as the airline offered discounts to attract customers in a seasonally weaker July-September quarter.

IndiGo's surge in revenue was led by a sharp rise in domestic travel during the quarter, as demand for domestic travel in India has continued to surge for the past two quarters.

In the quarter ended September 2024, IndiGo carried 244.49 lakh passengers commanding a market share of 62.5 percent during the quarter. Last year, during the same period, IndiGo had carried 234.09 lakh passengers commanding a market share of 60.7 percent.

In the pre-pandemic year of 2019, during the July-September quarter, IndiGo had carried 167.93 lakh passengers commanding a market share of 49 percent during the quarter.

Sequentially, IndiGo had reported a profit of Rs 2,736 crore on sales of Rs 16,683.1 crore in Q1 FY25 and a profit of Rs 1,894.8 crore on sales of Rs 17,825.3 crore in Q4FY2023-24.

While IndiGo managed to surpass market expectations in terms of revenues in its Q2FY2025 results, analysts had expected the airline to report a much lower loss for the quarter.

"IndiGo’s growth and expansion continued as our topline grew by 14.6 percent on a year over year basis, in the second quarter to 178 billion rupees. In a traditionally weaker second quarter, results were further impacted by headwinds related to groundings and fuel costs," the airline's Chief Executive Officer Pieter Elbers in a statement on October 25.

For the quarter, the company said its passenger ticket revenues stood at Rs 14,359.2 crore up 10 percent when compared to the same quarter a year ago and ancillary revenues at Rs 1,875. crore were up 21 percent compared to the same period a year ago.

At the operating level, earnings before interest, tax, depreciation, amortisation and rent cost (EBITDAR) profit or consolidated operating profit for the quarter came in at Rs 2,434 crore as against an operating profit of Rs 2,446.5 crore in the year-ago quarter.

The operating performance was marred by high fuel costs as revenue per available seat kilometre (RASK) stood at Rs 4.45, whereas cost per ASK (CASK) was at Rs 4.69. The airlines' RASK rose 4.8 percent from a year ago, while CASK rose 11.8 percent (more than double the RASK) from a year ago.

IndiGo's RASK fell from Rs 5.4 from Q1FY25 to Rs 4.45 in Q2FY25 as the airline offered discounts and cut prices on routes to attract customers during the quarter.

InterGlobe Aviation's yield per passenger rose to Rs 4.55 in the September quarter from Rs 4.44 a year ago, the company said.

The load factor for the no-frill airline stood at 82.6 percent at the end of the September quarter as against 83.3 percent in the year-ago period.

The company's total debt rose 20 percent on year to Rs 59,236.9 crore in the September quarter, while total cash rose by 28.3 percent to Rs 39,341.9 crore, including free cash of Rs 24,359.7 crore.

The airline had 410 aircraft in its fleet at the end of the quarter, up from 382 in the previous quarter. IndiGo operated at a peak of 2,161 daily flights during the quarter including non-scheduled flight.

InterGlobe Aviation, on July 26, had said that despite July-September being a seasonally weak quarter, it does not expect its yields in the ongoing quarter to fall when compared to the same period last year.

The airline's management, while addressing a post-earnings conference call on July 26, said that IndiGo's yields in Q2FY25 will likely fall when compared to Q1FY25 but are not expected to dip below the levels seen in Q2FY24.

The company expects third-quarter capacity to grow by low-double-digit percentage from a year earlier.

IndiGo is also bracing for its departure from an all-economy cabin when it introduces its first-ever business class on select domestic routes next month.