Shares of InterGlobe Aviation, the parent company of IndiGo, fell more than 8 percent intraday Wednesday after disappointing set of earnings in the quarter ended December 2016. Hike in jet fuel prices by Rs 1,539 kl also pushed the stock lower.
Profit during the quarter fell 25 percent year-on-year to Rs 487.26 crore, impacted by higher fuel prices and low fares.
The airline's net profit declined even as total income from operations jumped 16 percent to Rs 4,986.49 crore in the third quarter of the current financial year.
IndiGo's overall expenses shot up 31.2 percent to Rs 4,480.43 crore from Rs 3,415.66 crore in the same period a year ago, according to a regulatory filing.
This was mainly driven by over 40 percent rise in aircraft fuel costs, which stood at Rs 1,671.20 crore in the third quarter. The same stood at Rs 1,165.86 crore in the year ago period.
"Our profit was lower compared to the same period last year primarily because of lower yield and higher fuel prices. Because of lower yield, RASK (Revenue Per Available Seat Kilometre) declined 13.1 per cent compared to same period last year," InterGlobe Aviation President and Whole Time Director Aditya Ghosh said in an earnings call.
The airline's yield -- an indicator of money earned from a flight -- dropped 16 percent to Rs 3.48 per kilometre in the latest December quarter from Rs 4.14 seen in the same period a year ago.
According to the airline, demonetisation resulted in a sharp decline in yields in November and December last year.
A320 neo is giving better fuel efficiency at 15 percent, Ghosh said despite continuing to "face operational issues with neo engine".
"We have experienced higher than expected engine replacements... The airline has already extensively discussed these issues with the engine maker Pratt & Whitney last week," the IndiGo chief said.
According to him, this is called operational disruption and both P&W and Airbus are working to address these issues.
In the meantime, IndiGo continues to receive necessary operational and technical support including the provision for spare engines, he added.
Currently, the airline has 14 A320 neos in its 126-strong fleet and the number is expected to reach 133 by fiscal end.
"We have reported yet another profitable quarter despite lower yields and higher fuel prices. We see robust traffic growth ahead and we will continue to grow and strengthen our network with a view to maximising our long term profitability," Ghosh said in a statement.
At 09:23 hours IST, the stock was quoting at Rs 865.00, down Rs 38.00, or 4.21 percent on the BSE.
(With inputs from PTI)