IndiGo Shares Climb Over CEO’s Assurance That “The Worst Is Behind Us”

The shares of InterGlobe Aviation, the parent company of IndiGo, rose more than 2 percent on December 18 after the company's Chief Executive Officer Pieter Elbers addressed employees through a video message, telling them that "the worst is behind us." The move follows a severe disruption in its operations after many flights were cancelled, leading to chaos at airports across the country.

CEO's Message

Pieter Elbers acknowledged that the past two weeks had been extremely difficult but commended the staff for standing together. Elbers said that the airline had managed to recover from the crisis and added, "Through the storm, we found our wings again."

He thanked pilots, cabin crew, airport workers, operations controllers, customer service teams, and all other departments for their commitment. According to him, their coordinated efforts were the backbone of IndiGo's recovery.

Flight Operations Restored

Elbers announced that IndiGo has returned to operating 2,200 flights a day, bringing the schedule back to normal, and highlighted that it took just a short time to show the strength. He thanked the company staff for their teamwork and operating systems.

The turbulence in IndiGo's operations earlier this month was largely caused by a shortage of crew, especially pilots. This has been caused by the introduction of new rules called Flight Duty Time Limitation (FDTL), which mandated pilots and crew to take longer rest periods and more balanced work schedules. A move from the management to ensure safety and well-being of the employees. The carrier later struggled to cope up with the new roaster, leading to widespread cancellations and confusion at airports.

Focus on Stability and Improvement

Looking ahead, the airline would focus on three areas: resilience, root cause analysis, and rebuilding. The core of these measures includes keeping flights running smoothly even during bad weather or other challenges, meticulously studying the flaws to prevent recurrence, and rebuilding systems and processes to enhance the airline's reliability in the future.

Elbers also urged employees to abstain from spreading speculations or rumours, assuring them that a full investigation was underway.

To decipher the problems clearly, IndiGo's board has appointed an independent aviation expert who will carry out a detailed study. Elbers said that similar disruptions have happened to large airlines in other countries too, and learning from those experiences could help IndiGo improve its systems.

Share Price History

Since the beginning of December, IndiGo's shares had dropped more than 21 per cent, reaching a low of Rs 4,645 on December 11. The stock has since recovered by more than 7 per cent, though it is still below the levels seen before the crisis.

Analysts hold mixed views on the stock. International broking Jefferies has maintained a "Buy" rating on IndiGo despite the recent crisis. However, it has cut its target price by 16 per cent, lowering it from Rupees 7,025 to Rupees 6,035 for the next 12 months. Jefferies explained that the operational disruption caused by the new Flight Duty Time Limitation (FDTL) rules has forced them to reduce earnings estimates, but they still see long-term upside for the airline.

UBS has also maintained a "Buy" call, setting a target price of 6,350 rupees.