IndiGo Navigates Currency Headwinds, Charts Ambitious International Expansion in Q2 FY26

IndiGo, India's leading airline, reported its financial results for the second quarter of fiscal year 2026, showcasing robust operational performance and strategic advancements despite significant currency-related challenges. The company's total income for the quarter stood at 19,599.5 crore rupees, marking a commendable 10.4% increase compared to the same period last year. While the reported net loss was 2,582.1 crore rupees, primarily driven by foreign exchange movements, IndiGo achieved an underlying operational profit of 104 crore rupees (excluding forex impact and hedging gains), a notable turnaround from a loss in the prior year.

The quarter saw IndiGo's revenue from operations reach 18,555.3 crore rupees, growing 9.3% year-on-year, complemented by other income of 1,044.2 crore rupees, which surged by 32.3%. The airline's Available Seat Kilometers (ASKs) expanded by 7.8% to 41.2 billion, with Revenue Passenger Kilometers (RPKs) growing 7.7% to 34.0 billion. The load factor remained stable at 82.5%. This growth was underpinned by disciplined capacity deployment and a stronger revenue environment, particularly in domestic markets during August and September, exceeding earlier expectations.

Strategic Thrust: International Expansion and Fleet Transformation

IndiGo is aggressively pursuing its long-term strategy to evolve from a largely domestic operator into a global player. A key highlight is the upcoming introduction of the A321 XLR aircraft in the next few months, which will significantly extend its operational range to 7-8 hours, unlocking direct access to new international destinations in Asia and Europe, including Athens from Delhi and Mumbai in the new year. This move is crucial for capturing a broader share of the international travel market, where Indian operators have historically had a smaller presence.

To support this expansion, IndiGo has already added 4 B787 widebodies on damp-lease, with two more expected, serving new long-haul routes to Amsterdam, Manchester, Copenhagen, and London Heathrow. This interim solution bridges the gap until the delivery of its owned A350 widebodies, an order for which was recently doubled from 30 to 60 aircraft, signaling strong confidence in future international growth. The company is also investing in a new state-of-the-art MRO facility in Bengaluru, expected to be operational in 3-4 years, which will bring heavy maintenance in-house, reduce costs, and enhance operational efficiency.

Operational Excellence and Cost Management

Despite the challenges, IndiGo maintained its leadership in operational performance, consistently ranking first in on-time performance for nine consecutive months across major metro airports. This reflects meticulous planning and real-time coordination. The company served 28.8 million passengers during the quarter, growing 4% year-on-year, while the overall industry remained largely stagnant.

However, the quarter also saw an increase in unit costs. CASK ex-fuel ex-forex rose by 3.9% year-on-year, primarily due to the rupee's depreciation impacting dollar-denominated costs, annual contractual increases, and lower aircraft utilization spreading fixed costs over a smaller ASK base. Management anticipates an early single-digit percentage increase in unit costs (excluding fuel and forex) for the full financial year 2026. The company is actively mitigating foreign exchange risk through hedging, with approximately 850 million USD positions in its hedge book, and expects natural hedges to increase with growing international revenues.

Financial Health and Future Outlook

IndiGo's liquidity position remains strong, with free cash increasing to 3,851.67 crore rupees and restricted cash to 1,499.85 crore rupees. Total cash stood at 5,351.52 crore rupees. The company is also strategically transitioning its fleet ownership model, aiming for 30-40% of its total fleet to be owned or finance-leased by 2030, moving away from a predominantly operating lease-heavy structure. This shift is expected to provide greater financial flexibility and control.

Looking ahead, IndiGo has revised its capacity growth guidance for FY26 to 'early teens', reflecting confidence in robust demand, especially in the seasonally strong second half of the financial year. The company expects passenger unit revenues (PRASK) to be flattish to slightly positive in Q3. IndiGo's strategic clarity, disciplined execution, and proactive measures to expand internationally and manage costs position it well to capitalize on the immense growth opportunities in the Indian and global aviation sectors.