By Nandan Mandayam
(Reuters) -Indian airline IndiGo on Friday said it expects strong air travel demand in the fourth quarter of the ongoing fiscal year, but forecast a drop in yields on higher capacity.
IndiGo said it sees capacity measured in available seat kilometres (ASK) rising 20% year-on-year in January-March, helped by a constant stream of aircraft deliveries from Airbus in 2024.
The low-cost carrier received 58 aircraft from Airbus last year, according to data from the planemaker.
However, this is likely to pull yields down by a low single-digit percentage, finance chief Gaurav Negi said in a post-earnings call, compared to the previous year when engine-related groundings had constrained capacity and propped up yields.
IndiGo reported a 19% drop in third-quarter profit, hurt by ballooning foreign exchange losses, even as it flew a record 31.1 million passengers.
The airline plans to hedge most of its foreign exchange positions as well as boost international operations with the addition of long-haul routes, Negi said, to counter the negative effect of the rupee’s steep decline against the dollar.
Airlines in India often make payments for aircraft rentals, maintenance as well as international operations in dollars.
International operations currently account for about 10% of the airline’s revenue, and IndiGo hopes to increase this through foreign-denominated currency, including the dollar, he said.
IndiGo dominates India’s domestic aviation market with a market share of around 63% at the end of December and a fleet of about 437 aircraft.
It is also one of India’s few profitable airlines, and is Asia’s biggest airline by market capitalisation.
IndiGo also reiterated its earlier forecast of 40% of its grounded fleet flying by April as well as fiscal year 2025 ASK growth forecast in the low double-digit percentage range.
($1 = 86.1940 Indian rupees)
(Reporting by Nandan Mandayam in Bengaluru; Editing by Janane Venkatraman and Varun H K)
