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InterGlobe Aviation,which operates India's largest airline IndiGo, reported 11.7 per cent decline in its consolidated net profit on a year-on-year basis in Q1 FY25 to ₹2,728 crore driven by higher expenses.
In the same period last year, the airline had posted a net profit of ₹3,090 crore — its highest ever in the first quarter. While revenue from operations grew y-o-y to 17.3 per cent from ₹19,570 crore due to capacity growth and the airline also benefited from compensation from engine maker Pratt & Whitney, the overall result was weighed down due to higher costs in the quarter.
Overall expenses rose 24 per cent to ₹17,444 crore led by an increase in fuel costs. Employee expenses, aircraft lease rentals and maintenance also saw an increase. The result was also impacted by adverse foreign exchange movement. IndiGo also added older generation Airbus A320 aircraft over the last year and these consume more fuel than A320Neo version.
Cost control measures
In the first quarter of last year, IndiGo had benefited from lower fuel costs and also the closure of Go First increasing in a higher seat occupancy. During the quarter under review, seat load factor declined by 1.9 percentage point to 86.7 per cent
Currently, the airline has over 70 aircraft grounded due to engine issues and expects the number to reduce from the start of next fiscal year. While IndiGo has finalised a compensation agreement with Pratt & Whitney the amount will not cover the entire cost of grounding, airline's chief financial officer Gaurav Negi informed analysts in a post result conference call. " We are looking at various ways to control our costs," he added. Chief executive officer Pieter Elbers said the airline reported a solid profit margin of 14 per cent in the first quarter and remains confident of underlying growth and revenue environment.
Fleet size
IndiGo added 15 aircraft to its fleet in the first quarter taking the total fleet size to 382. It will take six Boeing 737 Max aircraft on a damp lease from Qatar Airways in the coming months to mitigate for the groundings. These leased aircraft would be flown by Qatar Airways pilots on routes between India and Doha.
In the second quarter, the airline expects capacity growth in high single digits and will continue to add new destinations and frequencies on existing routes.
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