IndiGo Q2 results: Spotlight on international transfers as potential cushion against forex losses

As IndiGo declared its Q2-FY26 and H1-FY26 results, the airline reported a splendid performance, but for the loss due to foreign exchange as the depreciating rupee hit the airline and pushed it into negative territory with a loss of ₹2,582.1 crore. It also pushed the first half of the financial year into a loss of ₹405.8 crore, wiping out the ₹2,176.3 crore profit of Q1FY26, which was achieved under difficult circumstances.

As reported in this article, the airline indeed performed better in terms of RASK (Revenue per Available Seat Kilometre) and Yield, improving both by 2.3% and 3.2%, respectively. Revenue from operations increased by 9.3%, with the load factors remaining flat and passengers growing only 3% when compared on a year-on-year basis. All of this did not help translate into a profit as the losses from forex climbed to ₹2,892.1 crore, up from 147.3 crore in the previous quarter and from ₹240.6 crore in the corresponding quarter last year.

The Indian rupee has depreciated against the US dollar for various reasons and closed at 88.84 to a dollar on 30 September 2025. The rupee was trading at 83.72 at the end of September last year, a fall of 6.1%. The airline is directly impacted because its operating leases are foreign currency-denominated, which is largely pegged to the US dollar. A slight depreciation of the rupee has an incremental challenge for the airline as it has over 300 planes on operational lease.

International transfers to the rescue?

From placing an order for the A350s, doubling the firm orders to leasing widebody aircraft as an interim measure, IndiGo has been consistently talking of international expansion, so much so that nearly the entire increase in capacity in the preceding quarter was coming from International operations and not domestic. As IndiGo started its long-haul international services to Europe from Mumbai, it added flights to points in ASEAN and retimed many other flights to connect seamlessly to Amsterdam, Manchester and Copenhagen. This included flights from Singapore, Phuket, Bangkok, and Colombo — large cities which see traffic flow to the IndiGo network in Europe — but also which have a mix of direct and multiple one-stop options via other parts of the world.

When the airline sells tickets in currency other than the rupee, it helps offset some costs of the depreciation. With a significant international network that caters to neighbourhood or leisure destinations, the airline is still relying on tickets booked in India, in Indian rupee or Indian Point of Sale in airline parlance, for its sales. Foreign Tourist Arrivals (FTA) have remained muted in India, with the April-to-June quarter seeing only 16.5 lakh FTA; data for the preceding quarter is not yet available on the Ministry of Tourism website. At the same time, 84.4 lakh Indians visited foreign countries. 10.93 million tourists visited India in 2019, translating to an average of over 25 lakh a quarter, though the numbers vary based on seasonality.

The transfer is where this challenge is addressed with flights booked at foreign points of sale in foreign currency and passengers who transfer at Indian airports flying between Europe and points in Asia. Not only does it help the airlines, it also strengthens the government's vision of making India a connecting hub and additionally helps airports handle more passengers without putting stress on the check-in and immigration services, while enjoying a portion of the retail, food and beverages spend in most cases. It is for the same logic that Air India, too, retimed its flights to Frankfurt, Paris and Australia to offer better connectivity from Australia to points in Europe.

Tail Note

In the end, it feels like the cards are stacked against the airlines at the moment, and no amount of capacity rationalisation or increase in fares has helped, even when the price of oil has been relatively stable as compared to the huge variations in the past. No matter how good the transfer game looks, IndiGo will have to always be on its toes to perfect it as any misconnected passengers mean long wait times in India, where visa from arrival is not the term. Competing Gulf carriers have multiple frequencies to Europe and thus the ability to accommodate passengers across other flights or destinations.

The focus thus shifts to not just international flights, but also international connecting passengers. Will it be enough to turn the page and get to profit? For an airline aiming to reach 600 aircraft by the end of this decade, it will have to keep one eye on its cost leadership and another on the rupee depreciation and aim to keep focus and not squint. With the value of the rupee beyond its control, it is possibly back to the drawing board to plan, execute and perform for the airline.

The author, Ameya Joshi, is an aviation analyst.