Interglobe Aviation Ltd’s (IndiGo) September quarter (Q2FY26) revenue grew 9% year-on-year, aided by optimized capacity addition, more passengers, and better yield (a pricing metric).
Available seat kilometres (ASK), a proxy for total passenger carrying capacity, increased by 8% with the induction of wide-bodied aircraft, enabling the airline to expand its presence in international, long-haul flights.
The management now expects high-teens growth in Q3 and Q4, which translates to early teens capacity growth for FY26 versus the previous guidance of early double-digits growth.
IndiGo’s international expansion comes at the right time. “As the rollout of capacity additions from Air India plays out over the next 12-18 months, IndiGo’s dominant positioning and industry pricing may face competitive pressure,” said a 5 November Jefferies India report.
IndiGo is likely to mitigate the negative impact by focusing on increasing its share on international routes, according to Jefferies.
While Q2 domestic ASK was flat, international grew 26%, forming about 30% of the total and projected to reach 40% by FY30. The wide-bodied jets have increased the airline’s flying range from 5-6 hours to 7-8 hours, the management said in the Q2 earnings call.
Rupee keeps it from soaring
Despite higher revenues and a 10% drop in fuel expenses, IndiGo’s Ebitdar (earnings before interest, taxes, depreciation, amortization, and rent) fell 64% to ₹860 crore, weighed down by over 10x rise in forex losses due to rupee depreciation, excluding which Ebitdar grew 44% to ₹3,800 crore. With a foreign exchange exposure of about $9 billion (~ ₹80,000 crore), foreign exchange loss would amount to about ₹900 crore for every rupee depreciation during the quarter.
IndiGo is also shifting to aircraft ownership from the lease model, which, though asset-heavy, is more cost-efficient. At Q2FY26-end, the number of owned or aircraft taken on financial lease rose to 76, forming about 24% of the total fleet, from 40 last year. The airline can buy an aircraft at depreciated value when a financial lease term ends, versus returning the asset when an operating lease ends. IndiGo aims to have 30-40% of its fleet as owned or on financial lease by FY30.
Aligned with this is its entry into the maintenance, repair, and overhaul (MRO) sector. An MRO facility is being built in collaboration with Bengaluru International Airport Ltd.
Amid improving market share led by competitive pricing and falling fuel prices, IndiGo’s shares are up over 40% in the past year. The stock trades at 23x its FY26 estimated earnings, according to Bloomberg. While a weak rupee can be a big drag, demand trends and fuel-price trajectory would determine the stock’s fortunes ahead.
