IndiGo Takes Flight To Recovery

Uniform fleet and more routes, especially in the domestic market, aid turnaround.

- URVASHI MISHRA

#45 TURNAROUND

INTERGLOBE AVIATION

IN THE EVER-EVOLVING tapestry of India's aviation landscape, the ascent of IndiGo has been nothing short of meteoric. From its humble beginnings in 1989 to becoming the country's largest airline with a market share of 63.2%, the journey of InterGlobe Aviation has been marked by resilience and strategic prowess. While it has reduced losses sharply, it is still incurring losses. Given the headwinds in the aviation sector, the question remains: Is the behemoth on the verge of a turnaround, or is it merely a fleeting respite in a turbulent sky?

After recording a loss of ₹1,583 crore a year ago, the airline operator swung back to a net profit of ₹189 crore in Q2FY24. Revenue from operations increased 20% year-over-year to ₹14,944 crore during the period. In the previous quarter (Q1FY24), it reported a net profit of ₹3,090 crore, and in Q4FY23, a profit of ₹919 crore. For full year FY23, however, IndiGo posted a net loss of ₹306 crore (including forex losses).

"We have remained consistently profitable for the last four quarters. In fact, this is the first time after FY18 that we have again achieved profitability in the seasonally weak Q2. Excluding the impact of foreign exchange loss, we reported an operational profit of ₹810 crore," CEO Pieter Elbers said during the company's earnings call.

"The most important factor has been low oil prices in the last year," says Suman Bannerjee, chief investment officer at US-based investment firm Hedonova. "But we have to also recognise that revenue has jumped 2x since 2022 from ₹26,000 crore to around ₹55,000 crore. When sales are that high and fixed cost remains same, profitability occurs automatically. The third important factor is market share. IndiGo now owns 63% of the domestic aviation market, and that has led to economies of scale," adds Bannerjee.

On A New Path