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Why IndiGo shares flew over 4% despite 3rd straight quarterly loss amid higher fuel costs: What lies ahead?

By · Published by Everything Blog

In short

InterGlobe Aviation narrowed its net loss to ₹1,880 crore for the September quarter, beating brokerage estimates despite fuel expenses climbing 67% to comprise nearly 38% of total outlays. Total operational revenue grew 26% year-on-year to ₹23,360 crore as passenger yields surged by 34%. Available seat kilometres fell by 1% as the airline operated a peak of 2,020 daily flights. Management now anticipates a lift in passenger revenue per available seat kilometre as seasonal demand strengthens.

Key points

  • Disciplined capacity reductions and yield improvements allowed the carrier to navigate hi…: Disciplined capacity reductions and yield improvements allowed the carrier to navigate high fuel costs and seasonal weakness.
  • Management expects third-quarter passenger revenue per available seat kilometre to rise a…: Management expects third-quarter passenger revenue per available seat kilometre to rise approximately 25% year-on-year.
  • The single-day share rally contrasted with an overall 2% decline in October, marking four…: The single-day share rally contrasted with an overall 2% decline in October, marking four straight months of stock losses.

Sources checked by our analysis pipeline: 1

Even as IndiGo, the parent company of InterGlobe Aviation, extended its quarterly losses to a third consecutive quarter in September (Q2 FY27), its shares settled 4.33% higher at ₹4,877 apiece in Friday’s trade on October 30.

Investors looked past the fuel-hit quarterly loss and focused on the airline’s efforts to protect profitability through fare hikes, capacity discipline and network optimisation.

IndiGo, India’s largest airline, posted its third consecutive quarterly loss, although the loss narrowed from a year earlier, reflecting better-than-anticipated operating performance despite sharply higher fuel costs year-on-year (YoY).

Revenue from operations grew 26% YoY to ₹23,360 crore, supported by a 34% increase in passenger yield and pricing actions, while available seat kilometres (ASK) declined 1% YoY amid capacity rationalisation.

However, fuel expenses rose 67% YoY, while the reported cost per available seat kilometre (CASK), excluding fuel and foreign exchange (forex), increased 15% YoY to ₹3.45, reflecting currency depreciation, inflation, and contractual costs.

Passenger ticket revenue stood at ₹20,652 crore, an increase of 29.3%, while ancillary revenue rose 15.9% to ₹2,481 crore compared with the same period last year.

Fuel…

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