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IndiGo share price spiked 2.6 per cent to hit an intraday high of Rs 4,270 apiece, but later pared some gain to trade 0.70 per cent higher at Rs 4,189 apiece as of 10:52 AM.
However, the airline’s share price has come under pressure in the short term, underperforming the broader market. Over the past one week, the stock has declined 4.06 per cent, compared with a 1.16 per cent fall in the Nifty 50. The weakness has been more pronounced over the last one month, with IndiGo shares sliding 15.24 per cent, sharper than the benchmark’s 10.25 per cent drop.
On a year‑to‑date basis, the stock is down 18.06 per cent, lagging the Nifty 50’s decline of 11.84 per cent. Over a one‑year period as well, InterGlobe Aviation has delivered a negative return of 10.92 per cent, while the benchmark index has gained 2.92 per cent.
However, the longer‑term performance remains strong. Over a three‑year horizon, InterGlobe Aviation has delivered returns of 124.49 per cent, significantly outperforming the Nifty 50’s 35.71 per cent gain. Over five years, the stock has risen 148.95 per cent, well ahead of the index’s 54.60 per cent increase.
The company in a statement on March 13 said, “This measure is taken due to the significant surge in fuel prices following the ongoing geopolitical issues in the Middle East. IATA’s Jet Fuel Monitor indicates an 85 per cent increase in fuel prices for the region.”
It further added that, “Aviation Turbine Fuel represents a significant share of airlines’ operating cost. This sudden and steep increase will have a material impact on all airlines’ costs and network, including IndiGo’s.”
While offsetting the entire impact of this fuel price surge requires a very substantial adjustment to fares, “IndiGo has introduced a relatively smaller amount as a Fuel Charge, keeping in mind the consequential burden on customers,” the airline said.
- Domestic and Indian Subcontinent will attract a fuel surgecharge of Rs 425
- Middle East to attract a surgecharge of Rs 900
- South East Asia, China, West Asia and Africa to attract a surgecharge of Rs 1,800
- Europe to see a surgecharge of Rs 2,300
- Jet fuel prices have nearly doubling in just weeks
- Jet Fuel prices have surged from around USD 85 to USD 90 per barrel to nearly double now
- Aviation turbine fuel makes up 30-40 per cent of an airline’s expenses
Likely Impact on Earnings
- Helps airlines pass part of fuel cost to passengers
- Supports margins amid rising ATF prices
- Industry-wide surcharge prevents price wars
- Estimated 8 to 10 per cent increase in airline yields
- Citi estimates it offsets only 25–30 per cent of fuel cost increase
- If fuel prices stay high then can impact on profits still pressured
Recently on March 10, the airline also saw its chief executive officer Pieter Elbers resign as CEO of the company, effective immediately. The company added that Rahul Bhatia will assume interim management of the airline following Elbers’ departure.
The leadership change came at a time when the airline industry is also awaiting the findings of a report on the operational disruption at IndiGo between December 3-5, when passengers across several airports faced delays and flight cancellations.
The report is expected to examine what led to the disruption and whether any operational changes are needed going forward. Bhatia, who founded IndiGo more than two decades ago, said the airline will continue focusing on service quality, operational reliability and stakeholder trust while serving India’s growing aviation market.
In his resignation letter addressed to Bhatia, Elbers said he was stepping down for personal reasons and requested that his notice period be waived. He also thanked the airline’s board and employees for their support during his time at the company. Elbers had taken charge as IndiGo CEO in September 2022 after spending nearly three decades with KLM Royal Dutch Airlines, where he later served as President and CEO.
(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money related decisions.)
