IndiGo Reports Steep 78% Decline in Quarterly Profit Amid Operational Challenges
NEW DELHI: India's largest domestic carrier, IndiGo, has reported a significant 78% drop in its net profit for the turbulent December quarter, with earnings falling to Rs 549 crore. This sharp decline comes in stark contrast to the robust profit of Rs 2,449 crore recorded during the same period in the previous year, October-December 2024.
Key Factors Behind the Profit Slump
CEO Pieter Elbers attributed the disappointing financial performance to a combination of operational disruptions and regulatory changes. The airline faced substantial costs due to flight cancellations and scheduling issues, which alone amounted to Rs 577 crore. Additionally, provisions for higher gratuity and leave encashment, as mandated by the new labour code, had a significant impact of around Rs 1,000 crore. The devaluation of the rupee further exacerbated the financial strain on the airline's bottom line.
Elbers, who recently received a warning from the aviation regulator for the airline's failure to adequately plan for crew flying timing requirements, highlighted these challenges during the earnings announcement. The operational issues were particularly severe in early December, leading to widespread disruptions across the airline's network.
Operational Disruptions and Flight Cancellations
According to government data, IndiGo cancelled approximately a quarter of its domestic flights scheduled between December 1 and 9. Out of the 17,404 domestic flights planned during this period, the airline scrapped about 4,351 operations. In contrast, the cancellation rate for international flights was much lower, with just over 2% of the 2,702 scheduled flights being called off. The exact reasons behind these extensive cancellations remain unclear, as the airline has not provided a detailed explanation.
Despite these challenges, IndiGo implemented several measures to mitigate the impact, including a 10% reduction in flights for the winter schedule and adherence to fare caps enforced for domestic flights since December 6.
Revenue Growth and Passenger Traffic
Interestingly, despite the large-scale disruptions and profit decline, IndiGo managed to achieve a 6.7% increase in total income, which rose to Rs 24,541 crore in the third quarter of the current fiscal year. This growth indicates resilience in the airline's revenue-generating capabilities even amid operational headwinds.
In terms of passenger traffic, IndiGo flew 12.4 crore passengers during 2025, marking a 9% increase compared to the previous year. This growth in passenger numbers underscores the airline's dominant position in the domestic aviation market and its ability to attract travelers despite the recent setbacks.
Market Response and Future Outlook
On the stock market front, IndiGo's shares closed 1.1% higher at Rs 4,914 on the BSE on Thursday, outperforming the broader market, which was up by 0.5%. This positive market reaction suggests investor confidence in the airline's long-term prospects despite the short-term challenges.
Looking ahead, CEO Pieter Elbers expressed optimism about the airline's recovery and growth trajectory. When asked about returning to pre-cut flight levels, he stated, "We are ambitious of returning to not just that level but growing further in coming times." This statement reflects the airline's commitment to overcoming current obstacles and expanding its operations in the future.
The combination of operational disruptions, regulatory changes, and currency fluctuations has created a challenging environment for IndiGo. However, with strategic adjustments and a focus on growth, the airline aims to navigate these hurdles and strengthen its market position in the coming quarters.
