IndiGo: Near term outlook to be tough; weak demand, higher costs to weigh

The challenge for IndiGo as highlighted by the management is to manage cash and liquidity rather than look at profitability and growth

Pegged back by the suspension of international flights for two weeks and domestic operations for nine days, IndiGo reported a muted operational performance in a seasonally weak quarter. Though capacity increased, lower passenger volumes was reflected in the 310 basis points fall in load factor, which capped revenue growth at 5.3 per cent over the year-ago quarter. Higher unit revenues and yield, however, helped offset some of the weakness in passenger volumes.

Higher costs on a weak revenue base aggravated the operating leverage, leading to a loss at the operating level. While fuel costs rose marginally over the year-ago quarter, given