Last updated on December 19th, 2024 at 09:51 pm
Interglobe Aviation reports Rs. 987 crore loss in Q2 FY24-25 despite 13% revenue growth. Rising fuel costs and expansion expenses impact IndiGo's profitability. Read Moneyphobia's full analysis.
IndiGo’s parent firm Interglobe Aviation disclosed it has incurred a huge loss for this quarter of the fiscal year FY24-25. In line with this, while the annual results revealed a 13% overall topline improvement and Q2 report released on October 25, 2024 showed challenges such as net loss of Rs. 987 crores despite an increase in the top-line numbers.
Revenue Growth of 13%
Interglobe Aviation’s revenue in Q2 FY 24-25 was at Rs. 1697 crore. This was outweighed by an increase from Rs. 14,944 crore in the same period last year, thereby showing a growth of 13% positively. The airline claimed that this was due to a higher customer travel frequency and a marginal increase in airfares , though the industry remained under considerable pressure by factors such as changing fuel prices and an unpredictable economy.
Unfavorable Gross Profit
The gross profit for this quarter is as follows and in comparison to the gross profit of the same period in the previous year. Gross loss before tax for the company in Q2 of FY20-21 was Rs. 456 crore whereas corresponding gross profit was Rs. 651 crore in Q2 of FY23-24. This means that they have reduced by nearly 170%. The significant decrease in the gross operational profit was due mainly to increase of fixed operating cost such as, fuel and maintenance cost, along with competition in home market.
Net Profit Plunges to -622%
The net profit too looked equally worrisome as the Interglobe Aviation flying docket registered a net loss of Rs. 987 crore. Generally, the company was able to achieve Rs. 189 crore of net profit for the same period of the previous year which has been a negative difference of 622 percent. The reasons which financial analysts have pointed to that led to the airline posting a lower net profit include higher operating expenses and weaker rupee. Also, expanded operating costs, chiefly in areas linked to the addition of fleets and initial operations of new routes, served as negative drivers.
Table of Key Financial Data
| Metric | Q2 FY24-25 | Q2 FY23-24 | Growth |
|---|---|---|---|
| Revenue | Rs. 16,970 Cr. | Rs. 14,944 Cr. | 13% |
| Gross Profit | Rs. -456 Cr. | Rs. 651 Cr. | -170% |
| Net Profit | Rs. -987 Cr. | Rs. 189 Cr. | -622% |
Moneyphobia Insight
And for investors, it is worth while to note that the current reporting period shows losses to Interglobe Aviation which may affect the company’s stock prices. However, market domination and the expansion strategy, which are elements owned by IndiGo might create value in the future. These disparate signals in this year’s performance are indicative of the fundamental challenges of the airline business today.
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