IndiGo's bottom-line turns red for Q2, high fuel costs, forced groundings main reason

India's largest airline with a market share of 62.5% and Asia's biggest carrier by market valuation, Indigo, posted a net loss of Rs 986.7 crore for the last quarter ended September 30, 2024. Indigo's profits during this quarter in 2023 were Rs 188.9 crore.

The main reason behind the carrier running into reds during the second quarter of FY25 was high fuel costs. Per the airline, its fuel costs jumped by 12.8% to Rs 6,605.2 crore, compared to Rs 5,856 crore in the year-ago period.

Another expense area that witnessed an exponential surge was aircraft and engine rentals, which rose to Rs 763.6 crore in the second quarter. This stood at Rs 195.6 crore in the year-ago period. All in all, the company's total expenses burgeoned 22% to Rs 18,666.1 crore during the previous quarter.

Indigo's revenue from operations, while down by 13.3% on a QoQ basis, from Rs 19,571 crore in June 2024 to Rs 16,970 crore as of September 2023, jumped 13.6% on a YoY basis. The company's revenue from operations during the September quarter in 2023 stood at Rs 14,944 crore.

Indigo’s consolidated top line also jumped 14% YoY to Rs 16,970 crore, which included Rs 14,359 crore of ticketing revenue and Rs 1,875 crore earned from ancillary services.

At the end of September 2024, Indigo had a fleet of 410 planes. For the last quarter, Indigo was plagued by mass groundings of its aircraft due to faulty engines manufactured by Pratt and Whitney Group. This had forced the airline to ground around 75 planes, or about 1/5th of its fleet.

However, in the earnings call today, the management noted that the worst was behind them. Indigo expects the number of non-operational planes to drop below 60 by the end of this year and further dip to 40 by March 2025. Already, the number of grounded aircraft had come down to the high 60s.

IndiGo’s cost per available seat kilometer (CASK)—a useful metric to assess an airline's operational efficiency—also inched up 12% YoY to stand at Rs 4.69. The company expects this figure to inch up to double digits by the next quarter.

Indigo's stock was down by 3.23% during the day, closing the week at Rs 4,373.70.