India`s IndiGo airline posts Q3 profit drop as rupee depreciates
India's IndiGo airline operator Interglobe Aviation reported an 18.6% drop in third-quarter profit on Friday, as foreign exchange losses ballooned, outweighing steady air travel demand and lower fuel costs.
The country's top airline by market share said its profit fell to 24.42 billion rupees ($283 million) in the three months ended Dec. 31 from 29.98 billion rupees a year earlier.
The low-cost carrier dominates India's domestic aviation market with a market share that stood around 63% at the end of December and a fleet of about 437 aircraft. It is also Asia's biggest airline by market capitalisation.
However, Indigo's operations have been hamstrung by a declining rupee and higher rental costs, which ate into its gains from lower fuel expenses - an airline's biggest cost.
The rupee's 2% decline in the December quarter was the sharpest in over two years. As a result, foreign exchange losses jumped about 29-fold, IndiGo said, pushing overall expenses 20% higher.
Airlines in India often make payments for aircraft rentals, maintenance as well as international operations in dollars.
Excluding the foreign exchange losses, IndiGo said its profit rose about 26% to 38.46 billion rupees.
Passenger yields - a measure of average fare paid per mile and an indicator of airlines' pricing power - declined 1%.
Revenue growth stayed steady at 13.7%, compared to last quarter's 13.6% growth.
Additionally, available seat kilometres (ASK) - a measure of the airline's passenger carrying capacity - grew 12% as IndiGo ungrounded more aircraft, meeting its own forecast of low double-digit growth.
The carrier expects capacity measured in ASK to grow 20% year-on-year in the January-March period.
Last quarter, the company reported its first loss in two years due to higher aircraft maintenance and rental costs from jets - powered by Pratt & Whitney engines - being grounded.
($1 = 86.1940 Indian rupees)
