On A321XLR deliveries - there are considerable delays. How does that shape up your guidance post FY26, probably over the medium term?
We still expect our XLR to come in this year. There is no change in that. We are not having yet given any capacity guidance for FY27, and neither are we going to do today. But what we have demonstrated over the years is that we have the ability to find alternative aircraft if needed. The planes which we have taken from Norse are really helping us to step up our international footprint on the longer haul.
On increased aircraft incidents in recent months at IndiGo - what's happening there? Is there a specific maintenance problem? Also on Indian government increasing seats under bilateral agreement with Kuwait - do you see increased competition from Middle East carriers?
On bilaterals - the Indian government has concluded bilateral agreements with Thailand, Indonesia, and other discussions are underway. Some recently concluded increased bilaterals are being filled. The government takes a holistic approach. Whenever there is additional frequencies being granted, Indian operators will operate them. But both sides must be of the view that changes have to be made. On aircraft incidents - IndiGo has a robust safety management system aligned with all local regulations and ICAO standards. We operate 2,200 flights on a daily basis. Aviation industry is still one of the safest modes of transportation. After the tragic incident, there is a highlighted sensitivity. IndiGo has a robust system in place with a very high technical dispatch reliability - one of the leading in the industry.
Can you give some sense on the increase in aircraft cost negotiated with OEMs due to geopolitical stuff? And if international is 30% of ASKs, what is the profitability contribution from international?
Again, no guidance on profitability for the future quarters. Related to the question on the negotiated cost of aircraft, the deliveries that we are getting is from our 2015 order book - negotiated back in 2015. So it reflects on the pipeline. IndiGo continues to have the surety of supply chain reflected in the fact that even today we are getting deliveries from our 2015 negotiated order book. There is still a 2019 and a 2023 order book yet to be executed. There is no kind of negotiation happening on the pricing of the aircraft now.
Your Q2FY26 ASK guidance is mid to high single digits on a base of last year Q2 which was also in single digit. Is this reflecting that the slowdown seen in May and June is expected to continue this quarter? Can you give some colour on whether this is mostly domestic or international?
On the contrary, the reflection on the ASK is largely driven by the softness that typically you see in the Q2 quarters. Q2 is the softest quarter in terms of travel related activities on the domestic side. We continue to keep adding capacity on the international side. We have taken a judicious call to look at our fleet holistically, ensuring we are not spending too much capacity but deploying our fleet towards maintenance and various activities in Q2 so we can gear up for the seasonally strong third quarter. Deploying too much capacity in Q2 which is the softest doesn't make sense. Year-over-year, we have already grown a lot of capacity and we are still committed to an early double-digit growth in the capacity numbers for the whole year.
On implementation of FDTL from July 1st - is Q1 employee cost a fair reflection of the increase expected from FDTL implementation, or do you anticipate further increase from Q2 onwards?
The first quarter reflects the normalized increase that the employees get every year. The implementation of FDTL starts from 1st of July. Most of it is going to get absorbed through efficiencies in-house. The second phase starts around November time frame, still under evaluation in terms of exactly what the changes recommended by regulators are. What you see in the first quarter is largely the annual increases across the board for all employees.
Comment on international profitability - any initial feedback on load factors for Amsterdam and Manchester? And on the Mumbai airport change this year, do you expect any disruption to operations or market share losses?
Internationally we have grown significantly - significant expansions to Abu Dhabi, Muscat, Dammam, Ras Al Khaimah and now Fujairah added. IndiGo is very well-positioned to deal with competition. The four customer promises we have underpinned by relentless focus on keeping our cost leadership. The market has grown 5-6% and IndiGo has grown 12% - that speaks for itself in dealing with competition. On Amsterdam and Manchester, it's a great opportunity for Indian travellers to fly nonstop. Very positive response both from Indian community in Manchester and British business community. On Mumbai airport change - changing of terminals always has some disturbance, but I take the example of what happened in Delhi with the closing of T2 - the entire system collectively has dealt with massive changes. I am very confident we will minimize any disruption.
IndiGo's load factor is much better than competition on both domestic and international routes. Is this a function of smarter pricing and yield management or increased customer preference for IndiGo?
I would almost say all of the above. We have an 85% load factor in Q1. What we do is a focused strategy. But to the two points you mentioned, allow me to add a third one - the network of IndiGo is really supporting that. We operate to 93 destinations in the country itself. When we connect a new city especially to one of the larger cities, it's not only a connection between two points but adds a connection to the entire network of IndiGo. So our network really should also be taken into consideration next to pricing and customer preference. 90% of the Indian population lives within 100 kilometres of an IndiGo served airport - that phenomenal number helps us really stimulate the load factor.
The fuel cost movement on a quarter-to-quarter basis seems much larger than what could be explained by movement in ATF prices. Is this solely from damp lease reductions or are there other one-off factors?
It's going to be a factor of where ATF prices are. On top of that, the damp leases that are being reduced were part of our network, plus some negotiations we have recently done related to our fuel being acquired from oil market companies. The combination of those three factors is what is driving the fuel down. The first two can be sustained, but the damp lease impact has already come through - that's already played out.
We have seen a pretty significant dip in aircraft rental but parallelly the other income number has not really changed much. Can you reconcile whether the current rate of aircraft rental is going to sustain and how does this play out in the other income number?
Other income is largely going to be finance income. Aircraft rental is directly proportional to the number of damp leases we have. That number continues to go down. Having said that, this number will stabilize because now we will be taking the Norse aircraft also. So while the narrow-body damp leases will come down, we are increasing the number of leases on the wide-body side - 5 more coming in this year. So the aircraft rental line will reflect more of the wide bodies than of the damp leases that we had on the narrow bodies.
When you guide for yield to be flat on YoY basis in Q2 based on what you are seeing today, is this what you see today or based on assumption that it will increase through August and September?
Given that we are giving a guidance for the whole of Q2, this is what we expect it will be. We are estimating for August and September we are seeing some improvements that already started to happen from June to July. That same trend we are expecting will continue going into August and September, on a year-over-year basis. We experienced significant softness in June, saw some improvement already in July, so there is some bit of stabilization. We expect this to improve in August and September leading to a year-over-year flattish price that we anticipate.
On overheads or the overall cost side, while earlier guidance was non-fuel basis we will be able to maintain numbers on YoY basis - any specific line items seeing slightly higher inflationary trend, especially among other expenses and airport fee and charges?
We are expecting that the overall CASK ex-fuel ex-forex is going to be in line with what it was last year in FY25. FY25 was a little elevated because of the damp leases. As that came down, the cost in other line items across the P&L is going to have their natural inflation/escalations come in through. So the CASK ex-fuel ex-forex for the whole year is expected to be flattish compared to FY25. In other line items related to maintenance, airport charges, international airports, as well as other expenses, we will have natural inflation/escalations. But the guidance is FY26 to be in line with what FY25 was on a CASK ex-fuel ex-forex basis.
On yield trends reported for Q1FY26, it was down YoY. Is it just a high base or because of the various unfortunate events? Purely on Q1 numbers, how much was impact of high base vs unfortunate events?
If you look at April, the trending was coming even stronger than what it was in FY25. These are all largely impacted by the events we have spoken about - April was coming very strong, it was on the back of a very strong Q4. April is an indication that yields were holding up and improving year-over-year. But the unfortunate events that transpired then saw a significant moderation in yield levels. Despite that moderation, the demand was very strong still. Q1 is more a reflection of the external factors that played their role based on what we saw in April. In July we are seeing some stabilization. August and September will at least offset some of those.
Factoring in Q2 guidance and full FY26 guidance, it appears there is little room for error and you need to add significant capacities. Can you give more sense on what's going to help there - accelerated AOG reversal, new planes, or deferment?
IndiGo has not only the world's largest order book, but last year no airline in the world took more planes than IndiGo. We continue to have a plane being delivered each and every week. That allows us to combine phasing in and phasing out of aircraft with stepping up or stepping down the number of damp leases to adjust our network to seasonal demand. In the first quarter we delivered a capacity growth of 16% year-over-year. In the second quarter we intentionally reduced it a bit to adjust our offered capacity with seasonality. We are very confident we can step it up again in Q3 and Q4. As the Indian aviation market matures, we will see increasingly trends common in other parts of the world - high season, peak season and lower season. The agility IndiGo has demonstrated over the past years is also being projected on this year.
Finance lease count has increased to about 69 from 31 in the base quarter. In finance lease the depreciation and interest cost is higher in initial period - is there any specific advantage of finance lease versus operating lease?
The benefit of a finance lease is that you have an option to buy out the aircraft at the end of the lease term. In an operating lease you are basically returning an asset. Everyone would love to possess an aircraft given the supply chain situation. From our standpoint, we are looking at building an airline which has ownership of the assets - that's why we drove that shift from operating leases for a large part of our 16-17-18 year existence. The finance lease approach is the first step towards that. There are some trade-offs but the biggest benefit is going to be ownership. Our MRO strategy also comes in because once you start owning these aircraft you will also have your own MROs to maintain them - an integrated approach.