Key Points:
- IndiGo profit drop: Net profit fell 78% to Rs 549 crore due to flight disruptions, labor costs, and regulatory fines.
- Operational challenges: Mass cancellations in December led to DGCA fines, warnings to executives, and a 10% reduction in the winter schedule.
- Strong fundamentals: Passenger traffic grew to 32 million, fleet expanded to 440 aircraft, and cash reserves remained over Rs 51,600 crore.
India’s largest airline, IndiGo, reported a IndiGo profit drop of 78% for the December quarter as widespread flight disruptions, new labor laws and regulatory penalties sharply increased costs, the company said Thursday.
IndiGo posted a net profit of Rs 549.1 crore for the October-December period, down from Rs 2,448.8 crore a year earlier, according to a statement from InterGlobe Aviation, the airline’s parent.
Flight Disruptions, Labor Laws Hit Earnings
The airline said exceptional items totaling Rs 1,546.5 crore weighed heavily on quarterly results. Of that, Rs 577.2 crore was linked to operational disruptions in early December, while Rs 969.3 crore stemmed from provisions related to the implementation of new labor laws.
IndiGo also accounted for a Rs 22.2 crore penalty imposed by the Directorate General of Civil Aviation for the disruptions, classifying it under exceptional items.
CEO Pieter Elbers said the airline faced “major operational disruptions” between Dec. 3 and Dec. 5, leading to large-scale cancellations and delays across its network.
“Despite these operational disruptions, IndiGo delivered a topline of around 245 billion rupees in the December quarter,” Elbers said, adding that revenue growth remained about 7% year over year.
InterGlobe Aviation reported total income of Rs 24,540.6 crore for the quarter, up from Rs 22,992.8 crore in the same period last year, underscoring strong demand despite operational challenges.
Regulator Action After Mass Cancellations
In early December, IndiGo faced severe disruptions that affected passengers nationwide. The DGCA said 2,507 flights were canceled and 1,852 were delayed between Dec. 3 and Dec. 5, impacting more than three lakh passengers.
Following the disruptions, the regulator curtailed IndiGo’s winter schedule by 10% until Feb. 10. On Jan. 17, the DGCA announced fines totaling Rs 22.20 crore and issued warnings to Elbers and two other senior executives for operational lapses.
The regulator also directed the airline to furnish a Rs 50 crore bank guarantee to ensure long-term systemic corrections.
According to a DGCA statement issued Jan. 20, IndiGo has assured operational stability and said it does not expect further flight cancellations after Feb. 10, based on approved schedules, increased crew strength and the withdrawal of two Flight Duty Time Limitations exemptions granted in December.
Passenger Growth, Strong Cash Position
Despite the IndiGo profit drop, the airline continued to expand its scale. The airline carried nearly 32 million passengers during the December quarter, while total passengers flown in the last calendar year stood at about 124 million.
Its fleet grew to 440 aircraft by the end of December, supporting an expanding domestic and international network.
“Our long-term fundamentals remain strong, backed by our expanding fleet and growing network,” Elbers said.
Currency movements related to dollar-based future obligations added pressure, aggregating to Rs 1,035 crore during the quarter, the company said.
IndiGo ended December with a total cash balance of Rs 51,606.9 crore, including Rs 36,944.5 crore in free cash and Rs 14,662.4 crore in restricted cash.
The airline reported capitalized operating lease liabilities of Rs 52,478.4 crore, while total debt, including those lease liabilities, stood at Rs 76,858.3 crore.
Analysts say IndiGo’s near-term performance will depend on operational stability and cost control, even as passenger demand in India’s fast-growing aviation market remains robust, which could prevent further IndiGo profit drop in the upcoming quarters.
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