IndiGo: The past, present, and potentially exciting future
18% of their stake since September 2022 and now own less than 20% of InterGlobe Aviation. While investors generally don’t react positively to promoters selling shares, this particular exit seems to have been conducted in a transparent and orderly manner. Investors did eventually absorb Gangwal’s gradual exit in 2023.
They welcomed the new management after it took the airline from a net loss of ₹305 crore in FY23 to a record profit of ₹8,167 crore in FY24. Driving these profits were the strong demand induced by post-pandemic “revenge" travel and limited growth in overall capacity, which boosted realisations. In a market suffering with lower capacity due to the grounding of some planes with Pratt & Whitney engines, Indigo increased its capacity by 22%.
It received new planes from previous orders, extended aircraft leases and signed new ones. At the end of the first quarter, it had 18 planes on damp lease. The airline has 70-80 of its 382-strong fleet grounded because of engine issues.
The engine supplier has agreed to provide IndiGo customised compensation for this. In its March 2024 presentation, IndiGo said it would continue to lease more aircraft to achieve its target of growing capacity by double digits in FY25. While these leases will affect the airline's profits in the short term, they will help it maintain its market share.
So while it tackles short-term issues, management has charted a systematic path to achieving its long-term goals. The impact of this move is apparent in recent data. IndiGo increased its fleet size from 367 in March to 382 in June, adding five planes on damp lease and 10 on operating lease.
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