Passengers are seen amid heavy crowds and chaotic scenes at Indira Gandhi Worldwide Airport after stringent new crew-rostering guidelines triggered widespread delays and cancellations in New Delhi, India, on Dec. 5, 2025.
Amarjeet Kumar Singh | Anadolu | Getty Photos
India’s largest airline, Indigo, that cancelled greater than 2,500 flights inside days final month inflicting large disruptions, reported a 78% drop in revenue within the December quarter, sending its shares down greater than 3%.
The corporate, which reported outcomes after market shut on Thursday, made a provision of 5.8 billion rupees ($63 million) towards compensation following flight disruptions in December.
The bigger affect on its earnings, nevertheless, was from a one-time cost owed to the implementation of latest labor code and foreign exchange losses, collectively amounting to about 20 billion rupees.
The dearth of progress on the U.S.-India commerce deal has harm investor confidence, contributing to capital outflows, and has weighed on the rupee, making it Asia’s worst performing foreign money final yr — down about 5%.
The foreign money was final buying and selling at 91.52 and consultants predict it to slide additional to 92 rupee per greenback degree by finish of March, which might spell extra bother for forex-exposed companies together with Indigo.
The March quarter for the airline is “anticipated to be weaker” regardless of a ten% rise in out there seat kilometers, or ASK, based on a report by Jefferies on Thursday. ASK is a key metric for measuring passenger capability.
The brokerage added that the airline will see a “moderation” in passenger income per out there seat kilometer (PRASK) and improve in value per out there seat kilometer as the corporate “continues so as to add plane.”
Jefferies maintains a purchase score on the inventory with a goal worth of 6,140 rupees per share.
Airways in India face stress on each prices and income fronts as a majority of the airways get almost 65% of their income from home journey, for which passengers pay in Indian rupees, however many of the prices are in {dollars}.
Indigo is including extra capability as a result of they should develop, however the subsequent 6-12 months might be robust, as we count on the rupee to weaken additional and gasoline prices to rise, stated Mark Martin, founder and CEO of aviation consulting agency Martin Consulting.
He instructed CNBC that Indigo might must fly on extra worldwide routes to enhance its greenback earnings. This was additionally hinted at within the firm’s earnings name, with the administration saying that new seat additions might be skewed towards worldwide routes.
Labor pains
A number of massive Indian firms, equivalent to Tata Consultancy Companies and ICICI Financial institution, have reported a one-time hit on earnings as a result of labor reforms in the course of the December quarter.
In November, the Indian authorities introduced reforms, consolidating 29 separate labor legal guidelines into 4 complete codes, strolling a tightrope between balancing enterprise pursuits and worker welfare.
Underneath these codes, fastened time period or contract workers will now qualify for advantages out there to everlasting employees, together with go away, medical, and social safety.
Nonetheless, this was not the one change in authorities regulation that impacted Indigo over the last quarter.
In November final yr, authorities applied flight obligation time limitation norms beneath which airways have been mandated to function fewer late-night flights and relaxation time for crew was elevated from 36 hours to 48 hours.
Within the first week of December, Indigo cancelled hundreds of flights, blaming it on the adjustments to the pilot relaxation coverage. Early December was the “essentially the most difficult weeks” in Indigo’s historical past, stated Pieter Elbers, chief govt of the Indigo.
Final week, India’s Directorate Basic of Civil Aviation ordered the airline to pay a penalty of 222 million rupees in reference to the operational disruptions, which is a part of the one-time provisions.
Presently, Indigo is working 2,100-2,200 every day flights, stated Elbers, who had come beneath hearth following the disruption in December, including that the airline will have the ability to adjust to the federal government’s flight obligation time limitation norms by February.
Indigo served 124 million clients in 2025, up 9% on yr, based on its assertion.
