InterGlobe Aviation Ltd (IndiGo) reported a steep 78% year-on-year fall in net profit to ₹550 crore for the December quarter (Q3FY26), hit hard by severe operational disruption in early December that led to large-scale flight cancellations.
As a result, net profit for the nine months ended December (9MFY26) has slumped 97%, weighed down by forex losses and a sharp rise in other cost items in the first half of the year.
Revenue for Q3 rose 6% to ₹23,500 crore, supported by an 11% increase in available seat kilometres (ASK), a proxy for passenger-carrying capacity. This was partly offset by a lower load factor, which measures seat utilization.
IndiGo had expanded capacity by inducting additional leased aircraft during the quarter to capture seasonal demand, but the plan was derailed by pilot shortages that triggered widespread disruptions. For the March quarter, management has guided for around a 10% increase in ASK, with a sharper focus on international routes.
Earnings reset
Reflecting reduced capacity and margin pressure, Motilal Oswal Financial Services has cut its FY26 Ebitdar estimates by 10%, while largely retaining FY27 and FY28 forecasts.
Ebitdar—earnings before interest, tax, depreciation, amortisation and aircraft rentals—also took a modest hit in Q3, slipping to ₹5,900 crore amid pressure from fuel, forex, employee and maintenance costs.
Based on January trends, IndiGo expects early-to-mid single-digit moderation in unit passenger revenue in Q4FY26, compared with a high base last year that benefited from strong travel demand linked to the Maha Kumbh.
Net profit erosion was amplified by exceptional costs of ₹1,550 crore related to the December disruption and provisions for the new labour code. The airline’s heavy exposure to currency movements—around $10 billion on its books—remains a key risk. Forex losses stood at ₹1,100 crore in Q3 and over ₹4,100 crore for 9MFY26.
Cost pressures are expected to persist in the near term due to higher manpower requirements under revised flight duty time limitation (FDTL) norms and the impact of capacity curbs imposed by the Directorate General of Civil Aviation (DGCA).
The FDTL norms, which restrict pilot flying hours and raise staffing needs, were suspended in early December after IndiGo faced extensive cancellations and delays due to pilot shortages. These norms are scheduled to be reintroduced from 10 February.
Long-term bet
Management has guided for cost per ASK (CASK), excluding fuel and forex, to rise by mid-single digits in FY26, compared with 2.6% growth in 9MFY26. Even so, longer-term prospects remain intact.
“Reported earnings materially understate underlying performance due to exceptional items and forex losses, and not demand weakness or margin pressure,” Elara Capital noted in a 23 January report.
This confidence is reflected in IndiGo’s acquisition of 14 aircraft during Q3, doubling its owned fleet to 28 as part of a strategy to shift from leasing to ownership. Aircraft ownership, while capital-intensive upfront, offers better profitability over time. Aircraft owned or on financial lease now account for 20% of the total fleet, up from 12% a year ago.
IndiGo shares were trading lower on Friday, extending losses since early December to around 20%. The stock trades at 21 times FY27 estimated earnings, according to Bloomberg consensus. Investors are likely to closely track regulatory developments, fuel prices and currency movements for further cues on earnings recovery.
