Indigo fourth quarter FY2018-19 results analysis: Massive increase in Q4 profits, but a sharp annual decline

Indigo Airlines reported its fourth-quarter results this Monday. As their CEO expounded – this year consisted of two halves. The 4th quarter was critical for Indigo as it pushed the airline to an overall profit. That said, the results continue to highlight the core challenges in the Indian market.

Key numbers for Indigo’s fourth-quarter results:

  • Revenue from Operations: 7883 crores
  • Operating cost: 7643 crores
  • EBITDAR: 2192 crores
  • Net profit: 589 crores
  • RASK: 3.60 INR
  • CASK: 3.35 INR
  • EBITDAR margin: 27.8%
  • PBT margin: 7.8 %
  • Load factor: 86%

Fleet: Indigo continues to position aggressively

Indigo ended the quarter with 217 aircraft effectively becoming the largest Indian airline by fleet. The mix was 71 A320 NEOs, 1 A321 NEO, 130 A320 CEOs and 14 ATRs. The A321 NEO is the most recent addition to their fleet and gives them an instant capacity advantage of 19% while lowers seat mile costs by 10%. The A321s, for now, will be financed via sale and leasebacks which will further strengthen Indigos cash position.

Current plans call for the A321 NEO to be deployed mainly on international operations and interspersed with domestic runs which gives Indigo the ability to leverage its slot portfolio.

Network: a focus towards international

On the network, Indigo now has dedicated 20% of its capacity towards international. The international focus will continue with longer flights being introduced including to China and Hanoi.

International expansion continues to be a clear focus area and the airline seems very confident that it will be able to take on legacy carriers – both domestic and foreign. That said sources indicate that there is robust debate within the organization whether the international expansion should include wide-body aircraft or not. In the call, their CEO indicated that while wide-body aircraft are being evaluated no decision has been taken as yet.

The one challenge that the international expansion is facing is the closure of the Pakistan airspace which is affecting Indigo’s Turkey bound flights.

Commercial: a yield uptrend but driven by a contraction in supply

Indigo’s 4th quarter performance also reflects the effect of significant capacity being taken out of the market – specifically by the grounding of Jet Airways. The 4th quarter is traditionally a weak quarter but interestingly the revenue flows strengthened. The challenge is to ascertain whether this revenue flow will weaken with more capacity coming into the market or if this is a reflection of the market picking up.

Industry dynamics: the elephant in the room

The collapse of Jet Airways has left a significant gap in the market. Indigo’s 4th quarter revenues were significantly strengthened by the sudden reduction in the overall capacity.

The current free for all is seeing massive capacity induction and a scramble to take over Jet’s former routes and assets. In order of number of routes – SpiceJet, Indigo and Vistara have launched new flights taking Jet’s slots at airports like Mumbai, Bangalore and Delhi.

As capacity is once again increased, it will have an impact on the overall yield of the market.


Overall, the market remains unhealthy. The primary reason for Indigo showing a profit in 2018-19 was the sudden jump in revenues in February and March brought upon by the collapse of Jet. The positive impact of the Jet collapse has already begun to fade and Indigo will soon find itself back in a difficult market.

About External Analyst

The writer(s) are external experts. Bangalore Aviation may not agree with the views expressed by the author. Authors prefer to remain anonymous for a variety of reasons but mostly since they are not authorised by their employers to express their views publicly on the record.

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