Can a record May offset a shrunk international schedule and help IndiGo turn a profit?

IndiGo, the country's largest carrier, will declare its Q1-FY27 results on Thursday, July 23, 2026. The results would come in the midst of renewed fighting in West Asia after an MoU between the warring parties which fell through. This also comes days ahead of Willie Walsh taking charge of the corner office at IndiGo which has been without a CEO since Pieter Elbers left in March, after he presided over a disastrous December debacle, first for the airline in its nearly two decades history.

In the middle of the pandemic, the airline took a measured call to expand on international routes, which would help the airline in more ways than one. This would help generate revenue in foreign exchange, which helps buffer some of the volatility of the currency. The airline then was focused on leasing all its planes, and the leases being dollar-denominated had a huge impact on its finances.

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The rupee depreciation was faster in the last two years, which led to the airline reporting its results with additional information on foreign exchange loss. Data shared by Cirium, an aviation analytics company, exclusively for this article shows that IndiGo had 19.3 percent fewer departures in Q1-FY27 compared to the same period last year. However the induction of the damp leased widebody aircraft from Norse Atlantic helped the airline have much lesser reduction in ASKs (Available Seat Kilometers) with the drop being just 10.5 per cent.

Domestic takes the cake; Forex will play its part

IndiGo’s undisputed domestic run has only gotten stronger in the preceding quarter, with June seeing the best-ever domestic market share by IndiGo at 66.3 per cent, while other carriers, mainly the Air India group, shrunk starting in June. Q1-FY27 was better on the domestic side for the airline as compared to the corresponding quarter last year which was marred by the deadly terrorist attack at Pahalgam in April, Operations Sindoor in May, and the crash of AI171 in June. The domestic market was also supported by the government by capping the increase in oil prices.

IndiGo has been working on a three-pronged strategy to tide over the foreign exchange challenges. A significant outgo for the airline is the lease rental, which is dollar denominated, and an over-15 per cent slide in rupees has a direct impact on its cash flow and balance sheet. The airline has been working on replacing its operating leases with finance leases, adding international services and retiring older planes. While the conversion to finance leases continued, international operations saw pressure due to the West Asia war and its prime markets in the middle east being either challenging to operate or out of bounds, while the relatively fuel inefficient A320ceo aircraft continued to operate as Pratt & Whitney powered A320neo continued to be grounded in significant numbers.

Profit or loss?

The record and bumper numbers on the domestic front are indicative of an operating profit, without the forex loss taken into consideration. However, the rupee has slid 16.8 per cent in the last year. This could well erode the profit compared to what the airline made in Q1-FY26, which stood at Rs 2176 crores, despite the challenges last year. The other factor is oil prices, which the government helped cap to an increase of only 25 per cent for domestic flights, while market rates applied for international operations.

The reporting by keeping the forex losses aside makes the results look good and shows the opportunity that presents in the Indian market, but does not take away and it's a different story. The airline would have reported a profit of Rs 1920.6 crores in the preceding quarter, had it not been for the forex losses which led to the airline record a loss of Rs 2,536.9 crores

At such times, the grounding of Pratt & Whitney powered planes, now in their 40s would hurt the airline the most unless it is being compensated beyond what it could have made by operating those planes. The airline would report positive numbers without the forex into the picture, but did it punch enough to sustain the onslaught of oil, closed airspaces and sliding rupee to record a total profit?