Rupee rout grounds IndiGo, airline slips to FY26 loss
A sharp fall in the rupee against the dollar and weak demand hurt IndiGo’s financial performance; The country’s largest airline suffered a loss, a first after reporting a loss in FY23.
InterGlobe Enterprises Ltd, which operates IndiGo, published a report on Friday. ₹There was a loss of ₹ 2,393.6 crore in the year ended March. ₹Last year, a profit of ₹7,258 crore was made. IndiGo attributed the losses to the 11% depreciation of the rupee against the dollar.
Since IndiGo’s leased liabilities are denominated in dollars, the decline in the rupee hurts the airline’s profitability.
Financial pain goes beyond forex While passenger traffic increased by just 7.5%, IndiGo’s capacity increased by 9.5%, reducing load factors to 84.4% from 86% in the previous year. Revenue per available seat kilometer, vital to understanding the power of pricing, fell 3% ₹4.99 indicates the airline is flying more seats at lower fares in response to less demand.
“FY26 was marked by an exceptionally challenging operating environment that significantly impacted our profitability,” said Rahul Bhatia, founder and managing director of IndiGo. Bhatia took over as the carrier’s chief executive following the sudden departure of Pieter Elbers in March. Former CEO of British Airways Willie Walsh joins the carrier from 3 August.
IndiGo’s peers are also facing similar problems. As the industry grapples with the impact of the West Asian war on fuel prices, the closure of Pakistani airspace and India’s weakest passenger growth since the Covid pandemic, Air India is expected to post losses of around $3 billion in the same period.
IndiGo’s revenue from operations increased by 5% ₹84,962 crore for 2026.
Revenue increased by 1.3% in January-March ₹Airline reported loss of ₹22,438.4 crore ₹2,536.9 crore.
“Despite these conditions, the underlying performance of the business remained resilient. Excluding the impact of foreign exchange and exceptional items, IndiGo ₹7,500 crore.”
Despite Bhatia’s optimistic comment on performance, operational weaknesses were evident in the financial statements.
For now, IndiGo has not provided full-year guidance on capacity or passenger growth as it has in the past.
“Towards the end of this year, we will provide a guide to available seats per kilometer for the entire year.” Finance chief Gaurav Negi said during the investor call after the results.
IndiGo said it will undertake a ‘selective recalibration’ of its domestic routes and deploy fewer aircraft in the seasonally weaker July-September quarter. The airline will also reduce its fleet size by returning or retiring less fuel-efficient aircraft.
“IndiGo reported a weaker-than-expected margin performance due to higher foreign exchange losses, especially due to rupee depreciation, said Jainam Shah, aviation analyst at brokerage firm Equirus Securities. “The impact of rising fuel costs arising from the West Asian crisis is likely to be reflected from Q1FY27 onwards,” said Jainam Shah, aviation analyst at brokerage firm Equirus Securities.
