IndiGo cuts capacity, phases out older jets after full-year loss
Dhaka: Indian low-cost carrier IndiGo has scaled back its capacity growth outlook and is looking to retire older damp-leased aircraft after posting a full-year net loss of INR 23.9 billion (USD 252 million) for fiscal year 2026.
Managing director Rahul Bhatia described the past year as "one of the most demanding periods for Indian aviation" during a full-year earnings call on May 29.
The loss marks a sharp reversal from an INR 72.6 billion profit recorded the previous year. Total revenue grew 6.4%, but expenses surged 17%. Full-year capacity rose 9.5%, while load factor declined 1.6 percentage points to 84%.
For the first quarter of fiscal year 2027, IndiGo now expects capacity growth of only 3–4%, compared with a 16.4% expansion during the same period last year.
The airline is still recovering from an operational disruption in December last year, compounded further by Middle East tensions driving up fuel prices, a depreciating rupee, and changes to local labor laws.
To counter rising fuel costs, IndiGo plans to phase out most of its older, less fuel-efficient damp-leased jets. As of March 31, its 441-strong fleet included 16 such aircraft — five Airbus A320ceos, five Boeing 737s, and six Boeing 787s.
A revised fuel surcharge introduced in April has helped recover a large portion of increased costs domestically, though management acknowledged it has not fully offset the impact on international operations.
Despite the challenges, demand for air travel remains robust, with the market described as "inelastic to heightened fares," according to Bhatia.
Incoming Chief Executive Willie Walsh, currently the outgoing IATA Director General, is set to join in early August. His experience leading a hybrid-model airline is seen as a key asset for IndiGo's future.
The carrier's A320-family aircraft will remain "central to the future of the company," with management pledging to protect short-haul operations while expanding long-haul services through planned additions of Airbus A321XLRs and A350s.
In the fourth quarter ended March 31, IndiGo posted a net loss of INR 25.4 billion, against an INR 30.7 billion profit in the same period a year earlier. Capacity rose 3.4%, while load factor fell 1.7 percentage points to 86%.
