IndiGo share price: Shares of InterGlobe Aviation (IndiGo) resumed selling after a one-day hiatus on Wednesday, December 10, hurt by a fresh order from the aviation regulator to cut 10% of its planned flights, following the airline's scrapping of at least 2,000 services last week.
IndiGo share price declined as much as 2.2% to hit the day's low of ₹4853 on the BSE. The stock has ended in the red in eight out of the last nine sessions, losing 18% during this period.
DGCA orders IndiGo to cut 10% of flights
The cut, raised from an earlier 5%, was announced by civil aviation minister Ram Mohan Naidu on X after a meeting with IndiGo CEO Pieter Elbers, to deal with the crisis that left thousands of passengers stranded.
The move is expected to remove at least 220 daily flights from IndiGo’s network, based on the number of services India’s largest airline operated before new pilot rest and duty rules took effect on November 1.
IndiGo confirmed late on Tuesday that it had received a notice from the Directorate General of Civil Aviation (DGCA) directing a 10% reduction in its domestic winter schedule across all sectors.
The disruptions at IndiGo came after the new FDTL (Flight Duty Time Limit) norms, which regulate maximum flying and minimum rest hours for pilots. New FDTL norms require airlines to have extra sets of pilots.
HSBC maintains ‘buy’ on IndiGo stock
While the number of required pilots will be based on its network and fleet mix, HSBC thinks this could increase staff cost between ₹450 million to ₹900 million, implying only 1% increase to its staff cost per ASK. Also, there could be some temporary reputational damage to IndiGo, especially in the international market, the global brokerage added.
While HSBC sees these incidents could hurt IndigGo's reputation, it said the impact could be short-lived.
As per the brokerage's estimates, there could be some cost burden due to FDTL but also flight cancellations and the forex. "We think IndiGo could cancel around 11,000 flights in total, causing revenue losses in the range of ₹1-2.5 billion and an all-India loss of around ₹3-5 billion," said the brokerage.
Overall, the brokerage has lowered its FY25 and FY26 EBTDA forecasts by 4% and 6%, respectively. It cut the IndiGo share price target to ₹5,977 from ₹6,920, but maintained a 'Buy' rating as it said that "we don't see any structural damage to IndiGo".
Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
