Shares of InterGlobe Aviation, the parent company of IndiGo Airlines, fell by as much as 9.3 percent on Friday to Rs 1,507.30 as they reacted to the budget carrier posting its biggest-ever quarterly loss.
On Thursday, the budget airline reported a surprise quarterly loss due to higher maintenance costs. It also cut its capacity expansion targets amid slowing passenger growth in the industry and a sluggish economy.
InterGlobe's net loss was at Rs 1,062 crore for the September-ended quarter. This is the second time that the airline as reported losses for a quarter.
In the same period of the previous year, it had reported a loss of Rs 651.5 crore.
IndiGo's maintenance costs spiked in the quarter under review as it said that it was forced to reassess the expense of leasing and maintaining older Airbus A320ceo planes to fill a gap caused by the grounding of newer A320neo aircraft due to engine issues, said Chief Financial Officer Aditya Pande on a call with analysts on Thursday, according to a Reuters report.
The company cut its expectations for capacity expansion for 2019-20 to 25 percent from 30 percent as it blamed it on the 3-4 month delay in aircraft deliveries by Airbus. For 2020-21, the capacity growth is projected at 25 percent.
Even as IndiGo flew more customers on a year-on-year basis, the overall domestic passenger traffic in India rose only 1.2 percent from the same period a year ago, the slowest increase since March and the second worst pace in at least five years.
The results come against the backdrop of an escalating tussle between the co-founders of IndiGo and top two shareholders Rakesh Gangwal and Rahul Bhatia over corporate governance issues and future strategy.