IndiGo cuts down growth outlook as Q3 profit sinks to four-year low

IndiGo has significantly cut short-term growth expectations after its October-December quarter earnings came under pressure due to a combination of new labor laws, regulatory actions and severe operational disruptions in December.

India’s largest carrier reported a 78% year-on-year decline in consolidated profit. ₹549 crore for the third quarter of fiscal 2026 (FY26), its weakest performance in four years, even as top management remained positive on normalization of operations and visible headwinds.

Third quarter decline driven by extraordinary costs ₹1,546.5 crore resulting from the implementation of new labor laws and compensation paid to passengers during a week-long flight cancellations in December.

Cuts mobilized civilians The aviation regulator will temporarily halt IndiGo’s flight operations and reduce daily domestic flight departures by 10% to around 2,000 per day in the first week of December.

This constraint led the company to lower its revenue growth target for the current fiscal quarter. It now expects available seat km growth to be in the “single digits”, below the “high teens” growth expectation set out by management at the end of the second quarter.

“This (cutback) will have an impact on the (March) quarter,” said IndiGo’s chief executive officer (CEO) Pieter Elbers said during a post-earnings call on Thursday. “October and November started well, followed by operational disruptions in December. Between December 3-5, there were 2,500 cancellations and more than 300,000 people were affected.”

Elbers added that operations have stabilized since January and are expected to remain stable in February. “We continue on our growth path,” he said.

“The effects of headwinds continue to grow on us,” chief financial officer Gaurav Negi said in a post-earnings interaction. Negi said passenger revenue growth in the March quarter is expected to remain in “mid to single digits” as the company hit a high base last year as more people flew during the Kumbh Mela.

Results meet expectations

Despite the losses, Indigo’s revenue from operations increased by 26.5% and 6.2% respectively compared to the same period in the previous year. ₹23,472 crore. The airline saw a 6% increase in revenue in the first nine months of the current financial year. ₹62,523.5 crore. Income collected ₹80,802.9 crore in the year ending March 2025.

Analysts viewed the results positively.

“IndiGo’s numbers are better than expected for the December quarter,” said Gagan Dixit, Aviation analyst at Elara Securities. “There are one-off hits. Overall, there is no long-term impact on operational metrics.”

Karan Khanna, Ambit Capital’s principal analyst for hotel, real estate, aviation, small and mid-sized companies, agrees.

“The results were largely in line with street expectations, except for one-offs,” he said. “However, profitability for the (December) quarter was affected by exceptional items, particularly foreign exchange losses, and adjustments related to the new financial statements. There were labor law and operational disruptions in December.”

Khanna also stated that the company has lowered its forecast for Q4 and is yet to provide any indication for FY27. “Looking ahead, the fourth quarter is also expected to face pressure from rupee depreciation. As a result, Q4 earnings are unlikely to deliver a positive material surprise versus market expectations,” he added.

shares InterGlobe Aviation, which operates IndiGo, closed 1.15% higher on the BSE on Thursday, while the Sensex was up 0.49% at 82,307.3 points. The airline announced its profit after markets closed.

Affected by extraordinary costs

InterGlobe Aviation, ₹970 crore has been hit due to the implementation of new labor laws that require companies to pay more pension benefits to employees.

also paid ₹₹577.2 crore compensation was paid for flight cancellations in the first week of December due to poor planning by the airline in complying with new rules restricting the number of flights a pilot can fly at night, effective from November 1.

The airline was also hit by a 17% sequential increase in fuel costs in the December quarter. Fuel typically accounts for one-third of an airline’s total cost.

The turbulence faced by IndiGo comes at a time when its closest rival, private Air India, is also trying to turn the tide.

The Tata-owned airline is reportedly looking for a successor to incumbent CEO Campbell Wilson, whose efforts to make the airline profitable have been strained by airspace closures amid tensions between India and Pakistan.

SpiceJet, the fourth largest carrier, is the other airline listed, while Akasa Air is also privately owned.