InterGlobe Aviation Q4 FY26 earnings call

Interglobe Aviation reported a net loss of 23.9 billion rupees for the full fiscal year 2026 and 25.4 billion rupees for Q4 FY26. Total income for FY26 grew 6.4% year-on-year to approximately 895 billion rupees. The primary driver for the losses was a significant foreign exchange movement, with the rupee depreciating over 11% against the USD, leading to 48.2 billion rupees in FX losses in Q4 alone. Excluding the impact of foreign exchange and exceptional items^📎, the underlying net profit for FY26 was 75 billion rupees, compared to 89 billion rupees in FY25.

The year FY26 was marked by repeated external disruption^🌐s, including geopolitical developments in the Indian subcontinent and the Middle East, which affected capacity deployment and operating conditions. The December disruption caused an incremental impact of 15-16 billion rupees due to lower capacity and reduced unit revenue. Despite these challenges, the company served 123 million passengers, its highest ever, and demonstrated operational recovery in Q4, leading to consistent on-time performance.

For FY26, ASK grew 9.5% and RPK grew 7.5%, with seat growth around 5%. The fleet expanded to 441 aircraft by year-end, with 72 gross inductions (51 from orderbook, 21 damp lease) and 65 redeliveries. IndiGo expanded its international footprint to 45 destinations, including new routes like Reunion Island and Shanghai, and inducted its first A321 XLR for long-haul international markets, deploying it on routes such as Athens and Istanbul.

Q4 FY26 PRASK was 4.46 rupees, 4% lower year-on-year, largely due to a high comparison base from Maha-Kumbh in Q4 FY25. CASK ex fuel ex forex increased 7% year-on-year to 3.15 rupees, driven by inflated dollar-denominated costs, lower aircraft utilization, and annual contractual increases. Fuel CASK, however, reduced by 5% year-on-year due to lower benchmark Singapore Jet fuel prices. The company is actively phasing^📎 out more expensive damp-leased and older technology aircraft to improve fleet efficiency and manage costs.

IndiGo maintained strong liquidity with 516 billion rupees in total cash, including 362 billion rupees in free cash and 154 billion rupees in restricted cash. The company's strategy involves maintaining 20-25% of annual revenue as a safety net, roughly 20,000-25,000 crores. Capital allocation focused on increasing asset ownership, with 820 million USD invested in a GIFT City entity for aviation assets and 450 million USD (43.4 billion rupees) used to prepay finance lease obligations for 17 aircraft, resulting in 36 unencumbered aircraft worth over 95 billion rupees.

For Q1 FY27, IndiGo expects capacity deployment to increase by 3-4% year-on-year and unit passenger revenue (PRASK) to improve by mid-teens, albeit with elevated costs. The company announced the appointment of Willie Walsh as the new CEO, joining in August, and Aloke Singh as Chief Strategy Officer, reinforcing leadership for its next phase of growth and global expansion. The core single-aisle, hybrid model strategy remains central, leveraging the new CEO's experience with similar models.

The company's net dollar exposure is approximately INR 10 billion. To mitigate this, IndiGo has enhanced its hedging policy, increasing its target to $3 billion, with $1 billion allocated for short-term cash flow hedges over 12 months and the remaining $2 billion spread over 2-5 years. Currently, $1.3 billion is hedged. Management is also in early stages of deliberating fuel hedging strategies given the recent significant run-up in fuel prices, which saw domestic fuel prices increase by 25-30% and international prices by over 100%.