“We have no choice but to look to increase fares,” said IndiGo CEO Willie Walsh, pointing to a 67.2% increase in fuel cost year-on-year. This came as it reported a net loss of Rs 1,879.1 crore for the July-September quarter, its third consecutive quarter of losses.
The loss is 27.2% lower than the year-ago period when it reported a loss of Rs 2,582.1 crore, but is bigger than April-June when it reported a loss of Rs 238 crore. It reported revenue from operations at Rs 23,363.8 crore, up 25.9%. IndiGo posted total income of Rs 24,311.9 crore, up 24%. Total expenses were ₹26,188.4 crore, up 18.6%.
Fuel and a weaker rupee drive costs
Fuel costs were higher at Rs 9,966.8 crore versus ₹5,961.8 crore. It accounts for 38% of its total spend. Chief financial officer Kiran Thadimarri said the benchmark fuel price in Singapore averaged a 60% increase over the same period last year. Also, the rupee averaged at Rs 95.09 per dollar versus Rs 87.06, driving up fuel costs and dollar-denominated expenses such as aircraft lease.
The foreign exchange loss was lower at Rs 1,333.2 crore versus Rs 2,892.1 crore. This helped in the year-on-year improvement. Net of currency impact, the company reported a loss of Rs 723.7 crore. It had reported a profit of Rs 103.9 crore in the year-ago quarter.
Fuel charges so far, and what comes next
IndiGo has already levied fuel surcharges on both domestic and international flights. It had announced a per-sector fuel charge effective March 14, pointing to a more than 85% hike in regional jet fuel prices as tracked by the International Air Transport Association. And it had recalibrated the charges effective April 2. It had then said it would have to raise fares massively to completely offset the hike. Hence, it took a call to charge a lower amount.
Walsh said IndiGo, like many airlines globally, has been able to pass on 60% of the fuel hike so far. He said he expects high fuel costs to persist in the December quarter. The airline has estimated passenger revenue per available seat kilometre to increase more than 25% year-on-year for the December quarter based on October numbers.
It carried 2.75 crore passengers, which is a 4.7% decline. Load factor dipped to 80.3% from 82.5%. But yield improved to Rs 6.30 per km from Rs 4.69. Walsh said the company has seen growth in the Indian aviation market with low airfares, but they need to balance that with the fuel hike.
Rather than slashing capacities across the board, it will look at routes and flights individually. Capacity expansion will be in low single digits for the December quarter. It will see the end of the widebody lease from Norse Atlantic on October 31. The reason, Walsh said, was the impact of fuel costs and the rupee’s fall. However, he said the introduction of Airbus A350 aircraft in 2028 isn’t getting delayed.