IndiGo reports Q4 loss on rupee, fuel and capacity pressures

IndiGo, India’s largest airline, reported a loss of 26.62 billion rupees for the quarter ended March 31 after a 10% reduction in domestic capacity, a weaker rupee and higher jet fuel prices.

The carrier recorded a profit of 30.73 billion rupees in the same quarter a year earlier. Quarterly revenue rose 1.3% year on year, while total expenses increased about 31%.

India’s aviation regulator directed IndiGo to trim domestic capacity by roughly 10% after widespread flight cancellations in December. The cancellations caused major operational disruption and preceded the abrupt departure of the airline’s chief executive officer.

More than 60% of IndiGo’s costs are denominated in U.S. dollars, directly or indirectly. The rupee’s depreciation produced foreign exchange losses of 48.82 billion rupees for the quarter, compared with a 1.38 billion rupee gain in the same period last year.

Jet fuel costs rose following supply constraints linked to the conflict involving Iran, which pushed crude oil above $100 per barrel at times. IndiGo does not hedge fuel costs and reported higher fuel expenses that reduced operating margins.

Revenue growth did not keep pace with the rise in expenses, resulting in the reported quarterly loss.