InterGlobe Aviation, which operates IndiGo, on Thursday reported a sharp fall in its October-December profit after one-time charges linked to widespread flight disruptions in December dragged earnings well below market expectations, even as revenue grew at a modest pace.
The country’s largest airline posted a consolidated net profit of Rs 550 crore for the three months ended December, down 77.5% from a year earlier. The figure was sharply lower than Bloomberg’s estimate of Rs 1,997 crore, reflecting the financial impact of large-scale cancellations and regulatory action during what is typically a strong quarter for the carriers.
Consolidated revenue rose 6.2% year-on-year to Rs 23,472 crore, marginally below Bloomberg’s estimate of Rs 23,711 crore. Earnings before interest, tax, depreciation and amortisation (Ebitda) increased 3.6% to Rs 5,367 crore, also missing the Bloomberg estimate of Rs 5,977 crore, as costs rose faster than topline growth.
Disruption Impact and Charges
The airline said profitability was hit by an exceptional charge of Rs 1,550 crore, largely on account of the operational disruption in December and the impact of new labour rules. The quarter saw nearly 3,000 flight cancellations following crew availability issues, leading to regulatory scrutiny and a temporary curtailment of capacity. Other income rose 21% year on year to Rs 1,070 crore, partially cushioning the impact.
Total expenses climbed 9.6% year on year to Rs 22,430 crore as the carrier absorbed costs related to refunds, passenger compensation and operational disruptions. The Directorate General of Civil Aviation (DGCA) had also directed IndiGo to cut 10% of its flights for a brief period, weighing on utilisation and yields.
CEO on December Setback
“The months of October and November started very well and disruption in December changed some of our numbers,” CEO, Pieter Elbers said on the post-earnings call. He added that the airline had taken steps to stabilise operations following the episode.
The December disruption was one of the most severe operational setbacks in recent years for IndiGo, which controls close to two-thirds of the domestic aviation market. Tens of thousands of passengers were affected, prompting regulatory intervention and a fine after authorities flagged lapses in planning and rostering.
“Our long-term fundamentals remain strong, backed by our expanding fleet, growing domestic and international network,” Elbers said in a statement.
IndiGo ended the quarter with a fleet of 440 aircraft after adding a net 23 planes. The airline said it expects capacity to rise about 10% in the March quarter. Passenger load factor, however, declined to 84.6% from 86.9% a year earlier, while total passengers carried stood at 31.9 million.
Net debt increased 2.7% sequentially to Rs 76,858 crore as capital expenditure and lease liabilities rose. The airline has in the past faced earnings volatility due to foreign exchange losses and the grounding of aircraft powered by Pratt & Whitney engines.