Can IndiGo duck the Q2 trend tomorrow?

India’s largest airline IndiGo will announce its second quarter and first half FY26 results on Tuesday. This quarter was traditionally a weaker quarter in the Indian industry, with IndIGo reporting a loss. ₹986.7 crore in FY2-25, with a modest profit ₹189 crore in Q2 2024.

While the financial year started on a challenging footing for the industry, with the terror attack in Pahalgam, Operation Sindoor and the AI ​​171 crash being the main events in April, May and June, the airline eventually ₹2,176.3 crore.

The regulator, the Directorate General of Civil Aviation (DGCA), is yet to announce the passenger numbers for the entire FY26-Q26 period to compare with previous years, but indications are that the airline has learned a lot from the previous year’s results, when it broke its seven-quarter profitability streak. While the entire sector experienced passenger losses in both July and August, data for September is expected.

IndiGo had a multi-pronged approach this time; The first of these was the reduction of frequencies on multiple domestic routes. According to data from aviation analytics company Cirium, IndiGo’s domestic capacity in terms of Available Seat Kilometers (ASK) remained the same year on year.

However, the airline showed a 5% growth in capacity compared to the same period last year. The growth was entirely due to international flights and the increase was 27%. While 16% of the 2nd Quarter-25 Fiscal Year total capacity was on international routes, this rate increased to 20% this year. Going international has many benefits; In many cases, it helps save cycles by enabling the asset to be used with fewer take-offs and landings. Some maintenance tasks associated with landing gear, among others, are linked to cycles, while the majority are linked to flight hours. International routes also help earn foreign exchange, which helps buffer the loss from devaluation of the rupee. This is a way to better manage demand and supply, especially when supply was much higher than demand last time.

IndiGo also appears to have reduced overall flights and is working on maintaining its aircraft in the lean period. It could have a negative impact on the bottom line with increased maintenance costs, but this will ensure the aircraft are ready for use during the high season from October to December without being taken for scheduled maintenance.

What should be paid attention to?

The airline will provide guidance on the current status of the withdrawal. While the accommodation situation has improved tremendously, has the airline fully recovered from this situation? As the situation improved, the airline no longer included the A320ceo in its fleet, although wet-leased A320s soon hit the road during peak season. Compensation from the placement was not disclosed by the airline but is considered the same as revenue from operations.

The airline is also redelivering Pratt & Whitney-powered aircraft as leases expire, making them less reliant on the GTF (Geared Turbo Fan) engines that have plagued the airline since inception.

The airline has announced new destinations such as Athens and Siem Reap, with the aim of flying to additional destinations in Central Asia; Some of these destinations may be rejected due to the ongoing closure of Pakistani airspace. Will the airline have any further announcements after the results? Most likely, action will be taken according to past trends.

tail note

How much of IndiGo’s agility translates into revenue and profit? A lot depends on how the airline manages its foreign exchange needs. With the reduction in capacity, IndiGo could in turn carry fewer passengers, but returns could go higher with the change.

It will be one more metric the airline will soon start tracking as it begins work on the hub in Mumbai, where international-to-international transfers are the main focus. This puts the airline in a different league with fierce competition, starting with Air India and many hubs in the vicinity.

Despite all the headwinds, IndiGo posted profits in Q1 and with its agility in Q2, it can secure its fourth consecutive quarter of profits; otherwise, there will be a break after three quarters, a much shorter period than the previous one.

Author Ameya Joshi is an aviation analyst.