IndiGo Q4 results: Net profit doubles amid high demand for air travel

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4 min read Last Updated : May 23 2024 | 8:45 PM IST


IndiGo on Thursday posted a consolidated net profit of Rs 1,894.5 crore in the fourth quarter of 2023-24 (FY24), recording a growth of 106.2 per cent year-on-year (Y-o-Y) amid high demand for air travel.


Moreover, marking a significant change in its business model, the low-cost carrier stated that it will introduce business class on its “busiest and business routes” by the end of this year. As of March 31, the airline operated 367 aircraft to 88 domestic and 30 international destinations, and all of them had just economy class seats.


In a conference call with analysts, IndiGo CEO Pieter Elbers said more details about the business class would be announced in August, when the airline is going to turn 18 years old. However, he did mention that the business class product would be “very IndiGo-like in terms of creating a very different structure” in the aviation market.

“India is changing rapidly, and the needs of Indian consumers are changing rapidly. We have seen that happening over the past couple of years. Against that backdrop, and looking at the network with IndiGo, wherein there are a lot of high-frequency routes with a lot of business-related travel, we felt collectively that this was the right moment to move into that space. This is a natural evolution,” he added.


About 27 per cent of IndiGo’s total passenger-carrying capacity currently operates on its international routes. The airline’s plans to introduce a business class offering were foreshadowed last month when it placed an order with European planemaker Airbus for 30 A350-900 widebody aircraft. Widebody planes boast larger fuel tanks, enabling their deployment on long-haul routes such as those connecting India to North America and Europe.


However, the delivery of the A350-900 widebody jets is not slated to commence until 2027 and beyond. Conversely, IndiGo is set to receive its first batch of the A321XLR aircraft – narrowbody planes capable of longer range than the A321neo – starting as early as next year. Therefore, the airline’s initial business class is expected to be on an A320neo or A321neo aircraft.


The airline on Thursday announced that it carried 106.7 million passengers in FY24, observing a 24.7 per cent Y-o-Y growth. Therefore, its annual consolidated net profit reached Rs 8,157 crore in FY24 from its consolidated net loss of Rs 2,980 crore in FY23.


In the fourth quarter of FY24, IndiGo witnessed a substantial 22.3 per cent Y-o-Y increase in total costs, amounting to Rs 16,734 crore. Nonetheless, the airline’s total revenues soared even higher, growing 26.2 per cent Y-o-Y to Rs 18,505 crore. During this period, IndiGo carried 26.7 million passengers, marking a 14 per cent Y-o-Y surge in traffic.


Interestingly, the escalation in the airline’s total costs for Q4 stemmed primarily from rising non-fuel expenses such as aircraft maintenance, airport fees, and employee costs, according to IndiGo Chief Financial Officer Gaurav Negi. Fuel costs comprise about 40 per cent of an airline’s total expense.


The spike in aircraft maintenance expenses and airport fees could be attributed to the fact that approximately 75 of the airline’s planes are currently grounded due to issues with Pratt and Whitney engines.


When questioned about the outlook for these grounded aircraft, Negi responded, “The number of grounded aircraft is in the mid-70s. We are not anticipating anything significantly adverse… We are not expecting anything that would be significantly different from the current situation.”


Negi added that the aircraft lease extensions as well as additions of new aircraft have significantly mitigated the situation. However, while the airline’s passenger capacity (ASK) growth was 21.8 per cent in FY24, the airline is expecting a capacity rise of “early double digits (10-15)” per cent in FY25, he clarified.


ASK (Available Seat Kilometres) is a measure of an airline’s passenger-carrying capacity, representing the total number of seats available for sale multiplied by the distance flown.

First Published: May 23 2024 | 8:32 PM IST