IndiGo, India’s largest airline, will declare its second quarter and first half FY26 results on Tuesday. The quarter is traditionally a weaker quarter in the Indian industry and IndIGo had reported a loss of ₹986.7 crore in Q2-FY25, with a modest profit of ₹189 crore in Q2-FY24.
While the financial year started on a tough footing for the industry with the terrorist attack in Pahalgam, Operation Sindoor and the crash of AI 171 being the main events in April, May and June, the airline ended up recording a profit of ₹2,176.3 crore.
The regulator, the Directorate General of Civil Aviation (DGCA), is yet to declare the passenger numbers for the entire Q2-FY26 to compare with the previous years, but going by the indicators, the airline has learnt a lot from the results in the previous year when the airline broke its seven-quarter run of being profitable. The industry as a whole has lost passengers in both July and August, while September data is awaited.
IndiGo had a multi-pronged approach this time around, with the first being reducing frequencies on multiple domestic routes. Year over year, the domestic capacity by Available Seat Kilometers (ASK) remained the same for IndiGo, shows data from Cirium, an aviation analytics company.
However, the airline did grow 5% in capacity compared to the same period last year. The growth was entirely driven by International flights, with the increase being 27%. While Q2-FY25 had 16% of its total capacity on international routes, this year, this has increased to 20%. The shift to international has multiple benefits; it ensures utilisation of asset with lower number of landings and take-offs in most cases, helping save on the cycles. Certain maintenance tasks linked to landing gears, among others, are linked to cycles, while the majority are linked to hours of flying. International routes also help earn in foreign currency, which helps buffer the loss due to rupee devaluation. This is one way to better manage demand and supply, especially when last time around, the supply was far higher than the demand.
IndiGo also seems to have reduced overall flying and is working towards maintenance of its planes during the lean period. It could have a negative impact on the balance sheet with the maintenance costs going up, but this will ensure that the planes are available for use during the October-to-December high season without being taken away for scheduled maintenance.
What to watch out for?
The airline will have guidance on the current status of grounding. While the grounding situation has improved tremendously, is the airline over it completely? With the improving situation, the airline did not induct any more A320ceo in its fleet, though wet-leased A320s have made a beeline during the peak season. The compensation from the grounding has not been announced by the airline but it accounts the same as income from operations.
The airline has also been re-delivering Pratt & Whitney-powered planes as its lease tenure ends, thus having fewer dependencies on GTF (Geared Turbo Fan) engines, which have troubled the airline since induction.
The airline has announced new destinations such as Athens and Siem Reap with ambitions to fly to additional destinations in Central Asia, some of which may see a rejig due to the continued closure of Pakistani airspace. Will the airline have more announcements after the results? In all likelihood, it would be going by the past trends.
Tail note
How much of this agility of IndiGo translates into revenue and profit? A lot depends on how the airline has managed the foreign currency needs. With the reduction in capacity, IndiGo might have carried fewer passengers sequentially, but with the change could have pushed yields higher.
As it starts working on the hub in Mumbai, with international-to-international transfers being a core focus area, it will be one more metric that the airline will start tracking soon. This puts the airline in a different league, which has cut-throat competition, starting with Air India and many other hubs in the neighbourhood.
Against all odds, IndiGo reported a profit in Q1, and with the agility in Q2, it could well ensure a profit, which will be its fourth consecutive quarter of profit; if not, it will be a break after three quarters, a much shorter run than the previous one.
The author, Ameya Joshi, is an aviation analyst.