The InterGlobe Aviation Ltd stock has declined 37% so far this fiscal. One reason was that the March and June quarter results were disappointing. The September quarter (Q2) numbers will ensure investor frustration continues. Profits are far worse than anticipated. InterGlobe runs IndiGo airlines, which reported loss of 652 crore in Q2, while a Bloomberg analyst poll expected a much lower loss of 391 crore.

Costs increased much faster as crude oil prices remained elevated and the rupee depreciated. Data from IndiGo’s earnings presentation shows spreads (RASK less CASK) were negative in the quarter at 0.51 per available seat km (ASKM). This measure in the June and March quarters was at 0.01 per ASKM and 0.10 per ASKM, respectively. RASK is revenue per ASKM and a measurement of unit revenues, whereas CASK is cost per ASKM and a measurement of unit costs. Performance was also hit on account of forex loss of 335 crore.

Also, pricing offered no respite thanks to intense competition. Yields declined by about a tenth compared to the same quarter last year. “Similar to the last quarter, the 0-15 day booking window remains weak with lower fares compared to the same period last year," InterGlobe said in its conference call.

Overall, IndiGo’s Ebitdar—or earnings before interest, tax, depreciation, amortization and aircraft lease rentals—declined sharply by 93% year-on-year to 111 crore. Ebitdar margin dropped to 1.8% from a robust 29% in Q2 2017-18 and 16% in the June 2018-19 quarter. Ebitdar is a key measure of profitability for airlines.

“Given disappointing yields, high crude prices and a depreciating Indian rupee, we cannot be constructive on IndiGo," said HDFC Securities Institutional Equity Research analysts in a note on the results. “Further, given this significant miss in earnings, we will be revising our estimates downwards."

Average Brent crude oil prices so far this quarter are slightly higher compared to Q2. In short, the turbulence will continue for airlines including IndiGo. It will hardly be surprising if after IndiGo Q2 results, investors of SpiceJet Ltd and Jet Airways (India) Ltd mark down their expectations substantially.