IndiGo’s net profit doubles to ₹1,895 crore in Q4 as travel demand soars

Flying high after announcing record fiscal numbers for FY24, India’s top budget airline announced it would introduce a ‘tailor-made business product’—or premium class—for busy routes before the end of the year.

Pieter Elbers, CEO of IndiGo, said the needs of the Indian consumer have been changing rapidly over the past few years. “Against that backdrop and seeing IndiGo’s network with a couple of routes with high frequency and a lot of business travel, we thought it was the right time to move into that space,” Elbers said in a conference call after the announcement of results.

On Thursday, IndiGo’s parent InterGlobe Aviation reported record consolidated total income of ₹71,231.16 crore, up 27.5% year-on-year (y-o-y), and record net profit of ₹8,172.46 crore during the fiscal, against a net loss of ₹305.78 crore a year earlier.

Meanwhile, FY24 Ebitdar (earnings before interest, tax, depreciation, amortization and rent) grew 140% y-o-y to ₹17,544.7 crore, with margins of 25.5%.

Driven by a 24.7% y-o-y surge in its traffic in FY24 to 106.7 million, IndiGo's market share rose from 56.8% in March 2023 to 60.5% in March 2024. Market share data is sourced from the DGCA (directorate general of civil aviation).

On Thursday, InterGlobe shares closed almost 1% up on the BSE at ₹4,400.55.

The move to premium

IndiGo said the premium class will be available on the “busiest and business routes” of the country, and further details would be shared by August. While the airline did not mention any specific route, the Delhi-Mumbai route, India’s busiest, appears to be a no-brainer.

Industry analysts have termed this move significant. “A very significant step, but once the details are known about the product and service model, a more qualified assessment can be made,” said Kapil Kaul, CEO of Centre for Asia Pacific Aviation in India.

Also read: With new Airbus order, IndiGo is likely taking a flight to becoming premium

The announcement comes after IndiGo announced last month that it would purchase 30 long-haul Airbus A350 aircraft. That announcement surprised the industry, as there is no global precedent of low-cost airlines successfully operating wide-body planes. That's because the economics of wide-bodied planes do not work without premium class seats, a product that low-cost airlines do not offer.

Industry insiders, however, said it may work in the case of IndiGo. “There is no successful example of a low-cost, long-haul airline in the world, but it may work for IndiGo since India is a unique market because of its sheer size, aspirations and also its geographic location,” an executive with an aircraft manufacturer said on condition of anonymity.

Also read: IndiGo to develop multiple hubs for non-stop flights to int'l destinations

The quarter gone by

During the fourth quarter ended March 2024, the airline more than doubled its Q3FY23 net profit of ₹919.2 crore to ₹1,894.8 crore. Total income rose 26.7% during the quarter in consideration to ₹18,505.1 crore

IndiGo’s cash reserves, including free and restricted cash, have increased ₹34,737 crore at the end of March 2024, an increase of 48.3% over the corresponding year when it was ₹23,424 crore.

Kaul said no other Indian airline is likely to report record profits. “Exceptional results and sets up a new benchmark. Indian market is fundamentally very strong, but overall don’t see industry profitability changing in the near term except for IndiGo,” he added.

Peer comparison

The company’s record performance during the full year was in sync with financial numbers reported by its global peers such as Emirates and Singapore International Airlines, who have also reported record numbers.

While Emirates reported record profits of $5.1 billion for the fiscal, Singapore International Airlines reported a record profit of $2 billion.

Also read: India's aviation-hub dreams get new wings as IndiGo takes long-haul route

In India, the airline is seeing a rise in the competitive landscape from new entrant Akasa Air, and the Tata Group, which is in the process of merging its four airlines into two, one low-cost and another full-service.

Elbers said that IndiGo will continue the growth momentum in the current fiscal (FY25). “Moving into the next financial year, we are highly energized by the growth that lies ahead for us, adding more than one aircraft every week,” he said. “The journey towards 2030 will be cemented by the increasing number of planes and an increasing number of happy customers.”