IndiGo Q3FY26 Results: Revenue Growth Amidst Profit Squeeze from New Labour Laws and Operational Disruptions

InterGlobe Aviation reported its financial results for the third quarter of fiscal year 2026, revealing a significant 77.5 per cent year-on-year decline in consolidated net profit. For the quarter ending December 31, 2025, the airline's profit stood at Rs 5,491 million, down from Rs 24,488 million in the same period the previous year. Despite this sharp drop in the bottom line, the company maintained a positive revenue trajectory, with total income rising 6.7 per cent to Rs 245,406 million, driven by steady growth in both passenger ticket sales and ancillary services.

The dramatic reduction in profitability was primarily attributed to substantial one-time exceptional items totalling over Rs 15,460 million. A major factor was the implementation of new national labour laws, which required a provision of Rs 9,693 million to align with updated wage definitions and statutory payout requirements. Additionally, the company was hit by Rs 5,772 million in costs related to operational disruptions and a significant impact from currency fluctuations on dollar-based future obligations. Without these exceptional items and forex impacts, the underlying net profit would have been a more robust Rs 31,306 million.

Operational challenges in early December 2025 played a critical role in the quarter's turbulence. Between December 3rd and 5th, IndiGo experienced mass cancellations—affecting over 300,000 travellers—due to a pilot shortage linked to revised Flight Duty Time Limitation (FDTL) norms. These disruptions led to an Rs 220 million penalty from the DGCA and approximately Rs 5,550 million in related operational costs. Despite these hurdles, the airline’s management highlighted its "service from the heart" approach, thanking employees for their efforts in swiftly restoring normalcy to the network.

From a growth perspective, IndiGo continued to expand its market presence and physical infrastructure. The airline's capacity, measured in Available Seat Kilometres (ASK), grew by 11.2 per cent year-on-year and it served nearly 32 million passengers during the quarter. By the end of December 2025, IndiGo’s fleet had grown to 440 aircraft, including a net increase of 23 passenger planes during the quarter alone. This expanding fleet supported a vast network of 96 domestic and 44 international destinations, maintaining a peak of over 2,300 daily flights.

The company's financial health remains solidly anchored by a strong liquidity position, reporting a total cash balance of Rs 516,069 million, of which Rs 369,445 million is free cash. While total debt, including capitalised operating lease liabilities, stands at Rs 768,583 million, the airline’s technical dispatch reliability remained high at 99.9 per cent. Looking ahead, IndiGo anticipates continued momentum, projecting a capacity growth of approximately 10 per cent for the fourth quarter of fiscal year 2026 compared to the prior year.

Disclaimer: The article is for informational purposes only and not investment advice.