The shares of Interglobe Aviation, which owns and manages IndiGo, India’s largest airline by passengers carried, crashed on the bourses on Tuesday, a day after the company delivered shocking numbers for the quarter ended June 30, 2018.

While revenues grew 13 percent year-on-year, a sharp 53 percent rise in fuel costs, a forex loss of Rs 246 crore (profit of Rs 6.6 crore a year ago) and competitive pressures — average ticket prices fell to Rs 3,823 in the quarter from Rs 4,191 a year ago—hurt profitability. EBITDAR nosedived 47 percent to 1031 crore. Yields dropped over 5 percent to Rs 3.6/km from Rs 3.8/km a year ago.

Prominent brokerage Morgan Stanley lowered its FY20 EPS estimates by 14 percent and warned that if the market leader was seeing such a big impact of fuel costs and competitive pressures, others would likely fare much worse. Credit Suisse expects to see these pressures continuing in the present quarter, ending on September 30. Little wonder that the stock fell as much as 11 percent to Rs 891 on Tuesday.

But pricing and cost pressures notwithstanding, demand remains strong with Interglobe seeing a 25 percent growth in passenger traffic over the previous year, though key metrics indicate a flat trend on a quarter-on-quarter basis. What’s also an overhang for the stock is a permanent solution to the issues it is facing with its fleet of A320-Neo aircraft fitted with Pratt & Whitney engines, which have been in the news after a few flying escapades.

First Published:Jul 31, 2018 1:22 PM IST