IndiGo Q3FY19 Results Analysis

Issue: 02-2019

IndiGo reported its third-quarter results that reflected an improving trend compared to the last two quarters with a profit of 190 crore. Overall, the results highlight the core challenges in the Indian market. IndiGo ended the quarter with 208 aircraft becoming the first Indian carrier to have more than 200 aircraft in the fleet. The mix was 66 Airbus A320 NEOs, one A321 NEO, 127 A320 CEOs and 14 ATRs. The Airbus A321 NEO is the most recent addition to their fleet and gives them an instant capacity advantage of 19 per cent while lowers seat-mile costs by ten per cent.

On the commercial front, IndiGo indicated that in Q3 pricing power in the 0 to 15-day window was picking up. This is critical as the last minute bookings carry with them the highest fares. In terms of sales, October was weak with November and December trending stronger. This coincided with the fact that Diwali was in November last year and that November and December also saw oil prices going down which would have helped margins. In spite of significant capacity addition through Q3 (55 aircraft inducted till date), the load factor decline was only three per cent and came in at 85 per cent which is commendable.