InterGlobe Aviation Ltd (INDIGO) Q2FY27 Concall Transcript - Sep-2026 Qtr
Neerav: Good evening, ladies and gentlemen, and welcome to IndiGo's conference call to discuss the second quarter of fiscal year FY '27 financial results. My name is Neerav and I'll be your coordinator. At this time the participants are in listen only mode. A question-and-answer session will follow today's management discussion. Should you need assistance during this conference call, please signal an operator by pressing '*' then '0' on your touchtone phone. Please note that this conference is being recorded. I would now like to turn the call over to your moderator, Ms. Richa Chhabra, Head of Investor Relations at IndiGo. Thank you and over to you, ma'am.
Richa Chhabra (InterGlobe Aviation Ltd): Good evening, everyone, and thank you for joining us for the second quarter of fiscal year 2027 earnings call. We have with us our Chief Executive Officer, Willie Walsh, and our Chief Financial Officer, Kiran, to discuss the financial performance and are available for the Q&A session. Please note that today's discussion may contain certain statements on our business or financials, which may be construed as forward-looking. Our actual results may be materially different from these forward-looking statements. The information provided on this call is as of today's date and we undertake no obligation to update the information subsequently. We will upload the transcript of prepared remarks by day end. The transcript of the Q&A session will be uploaded subsequently. With this, let me hand over the call to Willie Walsh.
Willie Walsh (InterGlobe Aviation Ltd): Good evening everyone and thank you for joining us on this call. As this is my first earnings call as CEO of IndiGo, I thought I would start by sharing a few thoughts from my first few months with the business. As you know, I joined IndiGo just before the airline completed 20 years of operations, an important milestone and also a good time to reflect on how far the business has come. Now, obviously, I knew IndiGo well before joining and had always respected what the airline had built. And my first few months inside the business have given me a much clearer view of what drives IndiGo's success. Strong cost discipline, a relentless focus on operations and an experienced team that knows how to deliver at scale. Now moving to the quarter, let me start with the operating environment. The global aviation industry continues to face uncertainty, particularly from geopolitical events, which are affecting travel patterns, operating costs and in some cases, the way airlines operate their networks. Now, we monitor these developments closely, both from a commercial and operational standpoint. Where conditions affect our ability to operate safely, we review the risks and make the necessary adjustments to our network. Safety will always be our top priority. And at the same time, the industry continues to operate with fuel costs well above historical levels. Airlines across the world, including IndiGo, have
Willie Walsh (InterGlobe Aviation Ltd): did through capacity and network adjustments and pricing actions, but cost pressures remained elevated. Now moving to our financial performance, our reported results were primarily shaped by two factors. First, exceptionally high fuel costs continued to weigh on our financial performance. And second, a seasonally soft period falling between the summer and festive travel peaks and includes the monsoon season. In response, we acted decisively to rationalize capacity across parts of our network. Our pricing actions and disciplined capacity deployment, together with a 5% reduction in industry seats, supported stronger revenue performance. However, due to the elevated cost environment, we reported a net loss of INR 19 billion. Our liquidity remains strong with free cash of around INR 399 billion, and this positions us to navigate near-term volatility while retaining the flexibility to invest in our long-term growth priorities. And those plans are supported by the significant opportunity we see in India. The near-term outlook may be challenging, but the foundations for long-term growth remain strong. I've spoken about the opportunity in India on many occasions, and I continue to believe it represents one of the most compelling aviation markets in the world. Continued investment in infrastructure, increasing connectivity, and the growing importance of air travel within the broader economy provides a strong foundation for long-term demand. IndiGo's strong base puts us in a good position to capture this opportunity and our priorities are clear. First, to continue building on the core strengths that have made India, sorry, IndiGo, India's preferred airline. And second, to maintain the operating and cost discipline that has been fundamental to the company's success. Third, to be disciplined about where and how we grow, with a clear focus on long-term value creation. And fourth, to build our international footprint in a measured way, taking advantage of the capabilities of the XLRs and the A350s, while preserving the strengths of our low-cost model. Alongside this growth, we are strengthening our relationship with customers through IndiGo BluChip. The program completed 2 years in October and is approaching 20 million members with more than 30 partners. So with that, let me hand over to Kiran, our new Chief Financial Officer, who will take you through the financial performance in more detail.
Gaurav Negi (InterGlobe Aviation Ltd): Thank you, Willy, and good evening, everyone. I'd like to begin by putting the quarter's performance in context. As Willy mentioned, the September quarter we delivered strong revenues in a seasonally soft quarter amid significantly elevated fuel costs. While the reported results capture the combined effect of these factors, it is important to distinguish their near-term impact from the underlying earning strength of the business. First, the fuel costs remained elevated. The benchmark Singapore Jet Fuel Index was 60% higher than Q2 last year. This increase, along with the rupee depreciation, flowed directly through to our cost base, a 69% increase in our fuel CASK. Second, the quarter reflected a measured and disciplined approach to capacity in a period of seasonally softer demand with seat deployment across the industry approximately 5% lower year-on-year. If you recall, the industry capacity in in Q2 last year also reflected seasonal adjustments. Third, in this environment, we delivered a 31% increase in RASK, which exceeded our guidance of more than 25% growth. While this represents strong revenue performance, it did not fully offset the abnormally elevated costs. Beyond ticket revenue, we are also strengthening ancillary revenues through a combination of broader range of customer choices, easier access to add-on services across our digital channels, and pricing. Our cargo business is also performing well, delivering strong revenue growth of 37% year-on-year growth during the quarter. Moving on to the headline numbers, we reported income of INR 243 billion, representing a growth of 24% year-over-year, with a yield growth of over 34% and a 2 percentage point reduction in load factors. In terms of profitability, EBITDA came in at INR 25 billion, a margin of
Gaurav Negi (InterGlobe Aviation Ltd): around 11%, compared to an EBITDAR of 11 billion rupees and a margin of 6% for the same period last year. On a like-for-like basis, excluding the impact of MTM and hedging, EBITDAR margin declined by 5 percentage points, largely driven by fuel and cost escalations. For the quarter ended 30th September 2026, we reported a net loss of 19 billion rupees, compared to a loss of 26 billion rupees in the same quarter last year. Excluding the MTM and hedging impact, we reported a net loss of around 7 billion rupees compared to a net profit of around 1 billion rupees in the same period last year. Turning to our cost performance, CASK ex-fuel, ex-forex MTM came in at INR3.45 for the quarter, approximately 15% higher year-on-year. The increase was largely attributable to the following factors: the 9% depreciation of Indian rupee over the past 12 months, which increased the rupee cost of our US dollar-denominated expenses, and capacity rationalization, which led to underabsorption of fixed costs across the operating fleet and annual contractual escalations. In this volatile environment, we considered it economically prudent to conclude our wide-body damp lease operations with effect from 1st of November. We have derived useful long-haul operating experience ahead of the arrival of our A350s. Even as we respond to the near-term operating environment, we continue to invest in our long-term growth priorities. During the quarter, we announced Dar es Salaam as our newest international destination with daily direct services from Mumbai beginning in November. The route expands our presence in Africa and further strengthens connectivity between India and key international markets. Moving to the fleet, we inducted a total of 22 aircraft from our original order book, all of which were inducted through our entity in GIFT City. We redelivered 10 aircraft and two damp lease aircraft during the quarter, resulting in a total closing fleet of 442 aircraft at the quarter end. Turning to the balance sheet, we continued to maintain a strong liquidity position, ending the quarter with total cash of 527 billion rupees, comprising free cash of 399 billion rupees and restricted cash of 128 billion rupees. Moving to our outlook for the third quarter of this financial year, we expect capacity to grow in the early single-digit year-on-year. The capacity outlook reflects the conclusion of our damp lease wide-body operations, the prevailing geopolitical environment and our disciplined approach to capacity deployment. On the revenue side, the environment remains supportive with pricing continuing to reflect the higher cost backdrop and the base impact from last year. Based on the trends observed in October, we expect PRASK to grow by more than 25% year-on-year. For the full financial year, we expect capacity to grow in the early single digits. On the cost side, we expect CASK ex-fuel, ex-forex MTM to increase in the high single digits to early double-digits range, largely reflecting the impact of rupee depreciation in addition to the usual escalations. We remain mindful of the near-term challenges posed by elevated costs and continued volatility. At the same time, pricing remains supportive and our liquidity position is strong. We will continue to act with discipline, carefully managing capacity, allocating capital prudently and protecting profitability while investing in opportunities that support sustainable long-term growth. With this, let me hand it back to Richa.
Richa Chhabra (InterGlobe Aviation Ltd): Thank you, Willy and Gaurav. Now, to answer as many questions as possible, I would like to request that each participant limit themselves to one question and one brief follow-up question, if needed. And with that, we're ready for the Q&A.
Moderator: Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. First question is from the line of Binay Singh from Morgan Stanley. Please go ahead.
Binay Singh (Morgan Stanley): Hi, team. The company's managing quite well in a pretty tough environment. Just two questions. One on PRASK, and one on the wide-body announcement. On the PRASK side when we talk about 25% plus in Q3 which implies the usual sequential jump, how are the customers responding to it? How are the load factors when you look into the Diwali week and all? Could you share a little bit about load factor outlook both on domestic and international? The second is on the wide-body exit that we'll do from November. What will be the impact of that on you know, the spreads, RASK minus CASK? Is that a positive impact, anything you could share on that? Thanks.
Willie Walsh (InterGlobe Aviation Ltd): Okay, I'll comment first, and if Kiran has anything to add. So, we think load factors in the third quarter, and remember it is seasonally stronger, will be flat during the quarter based on our current position and forward bookings that we're we're witnessing at the moment. And in relation to the wide-body, let me hand over to Kiran.
Binay Singh (Morgan Stanley): Yeah. And, sorry, would you flat flat on a YoY basis or on a quarter flat on a YoY basis?
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