IndiGo posts Rs 1,879-crore loss as high fuel costs, geopolitical woes hit; capacity cuts & yield manageme

India's largest airline IndiGo on Thursday reported a net loss of ₹1,879 crore in the September quarter as soaring jet fuel prices due to the West Asia crisis dwarfed fare hikes and revenue growth. The seasonally soft September quarter saw exceptionally elevated fuel costs and continued geopolitical turmoil, said Willie Walsh, IndiGo's newly-appointed chief executive on a post-earnings analyst call. We responded with prudent capacity reduction and yield management, supporting strong revenue performance but only partially offsetting the higher costs.

135337754Net loss in the fiscal second quarter narrowed 27% from a year earlier thanks to a 26% increase in revenue at ₹23,363.8 crore. However, a more than 67% surge in fuel costs neutralised the revenue growth advantage. Jet fuel was priced at ₹137 per litre in October for domestic flights, 46% more than a year earlier.

The fuel costs remained elevated, and this coupled with a higher foreign exchange rate impacted our numbers, said Kiran Thadimari, chief financial officer. While we have been able to increase the unit revenue of ticket price, this didn't fully offset the hike in fuel price. IndiGo guided for low single-digit capacity growth in the December quarter, while strong ticket prices would boost passenger revenue by more than 25%.

Walsh said while fares will stay elevated during the current festive quarter, occupancy may remain flat. We have no choice but to look to increase fares in an effort to offset the very significant increase that we have seen in the fuel bill, he said. IndiGo will also look at rationalising flights to limit the impact of prevailing higher fuel prices.

We remain mindful of immediate challenges, but pricing remains strong, he said. We are looking at a network on a flight-by-flight basis to arrive at a decision. Data from aviation analytics firm Cirium showed IndiGo will operate 1.6% less seats this quarter compared to last year.

The October to December quarter is considered a peak period for airlines as it comprises major festivals such as Diwali and Christmas besides New Year travel. Walsh said that IndiGo doesn't have any plan to go slow on taking delivery of new planes as it remains bullish on strong demand returning in the long term. IndiGo will also continue its long-term international expansion plans.

The airline expects to introduce its first Airbus A350 into service in the second or third quarter of 2028. We're not going to delay any of our longer-term plans because of what we're seeing in the fuel price at the moment, he said. Walsh said Indian carriers need to capture a larger share of the country's international market, citing scale of traffic through major global hubs.

We will continue to invest for the future, he said. The airline sees India's long-term aviation opportunity as compelling, with priorities centred on safe and reliable operations, rigorous cost discipline and disciplined growth that creates sustainable value.