IndiGo’s profits take a hit as rupee depreciates

Record passenger numbers between October and December helped IndiGo parent InterGlobe Aviation post better-than-expected revenue, but a sharp fall in the rupee against the dollar hurt the profitability of the country’s largest airline.

The rupee depreciated 2% against the US dollar in the latest quarter resulting in foreign exchange losses as IndiGo’s lease liabilities are denominated in US dollars. $Foreign exchange loss of Rs 1,456.4 crore during October-December period $509 million in the same period last year.

InterGlobe Aviation, which operates IndiGo, reported revenue growth of 13.7% over the same period last year $22,992.8 crore for the three months ended December.

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However, expenses increased by 20% compared to the same period last year $20,465.7 crore in the December quarter. In addition to foreign exchange losses, the cost of leasing aircraft for short-term use (also known as wet leases in airline parlance) accounted for about 14% of total expenses, and this cost increased by 14%. $2,858 Crores.

To the delight of investors, fuel costs, which account for one-third of total spending, fell 6.1% to $6,422.6 Crores.

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As expenses grew faster than revenue, profit after tax fell 14.3% to $2,449 Crores.

Analysts at brokerage JM Financial expect IndiGo to report a net profit of $2,555.9 Crores.

“We delivered a strong operational and financial performance in the third quarter of fiscal 2025,” said Indigo CEO Pieter Elbers.

According to data from the Directorate General of Civil Aviation, Indian airlines’ domestic passenger traffic reached a record high of Rs 428 crore between October and December. Since IndiGo is the largest airline, it will benefit the most.

“Look, FX currencies are out of our reach… but if you look at the operations side of the business, you’ll see profits increased by 26% $38,461 million shows that our strategy is working,” CEO Elbers said in a post-earnings interaction with analysts.

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At present, a tenth of IndiGo’s revenue comes from outside India, and management said the airline’s rising share of international business can act as a “natural hedge” against the depreciation of the rupee.

Vinit Bolinjkar, head of equity research at Ventura Securities said Mint“Excluding FX-related decreases, IndiGo’s results were very much in line with expectations. Both revenue and Ebidtar grew strongly.”

Founded in 2006 and listed in 2015, Indigo has established an undisputed lead with a 61.9% market share in terms of passenger numbers, three times that of India’s second-largest airline Air India (16.4%). To stay ahead of the curve, the airline has placed record aircraft orders from Boeing and Airbus, with management saying it expects to order an average of one aircraft per week over the next decade.

Profit before interest, taxes, depreciation, amortization and restructuring or rent costs or Ebitdar rose 10.7% to $6,059 crore. Ebitdar is an important operating metric for airlines.

“We added 50 new routes in the third quarter. Air travel demand is expected to grow as the Indian economy maintains its position and Indian businesses expand internationally,” Elbers said.

IndiGo, one of the global airlines with a fleet of 437 aircraft, has been plagued by problems with engines supplied by U.S. engine manufacturer Pratt & Whitney. Indigo did not quantify the exact number of grounded aircraft during the quarter, but did say “60” aircraft were grounded.

“The situation at AOG has reached its peak as the grounding of aircraft occurred in the 1960s,” Chief Financial Officer Gaurav Negi told analysts after the earnings release. “We will start in the 40s AOG’s new fiscal year. Last quarter, we increased capacity by 12% and we expect capacity to increase by 20% in the fourth quarter,” he said.

Indigo shares closed up 0.6% $At 4,162.80 points per share on Friday, the Sensex closed 0.4% lower at 76,190.4 points. Earnings are announced after the transaction closes.