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IndiGo Slashes Financial Forecast Amidst Disruptions
11 Dec
Summary
- IndiGo revised its financial guidance downwards for the third quarter.
- Flight disruptions led to significant revenue loss and passenger support costs.
- The airline's stock has seen a substantial decline in the past month.
Interglobe Aviation Ltd., the parent company of IndiGo, announced a significant revision to its financial guidance for the third quarter of the current financial year. This downward adjustment comes in the wake of severe flight disruptions that caused considerable operational challenges and financial setbacks for the airline. The company anticipates a reduced growth rate for Average Seat Kilometer (ASK), a crucial metric for passenger capacity, revised to high single to early double-digits from a previously projected high teens. This recalibration underscores the impact of recent events on the airline's performance projections.
Consequently, IndiGo has also revised its guidance for Passenger Unit Revenue Per Available Seat Kilometer (PRASK), now forecasting a mid-single-digit decline for the December quarter, contrasting with earlier expectations of flat to slight growth. The airline cited measures taken to reset operations, which resulted in approximately 4,500 flight cancellations in a single week, leading to substantial revenue losses. Furthermore, ongoing passenger support services for these disruptions are incurring additional expenses, the full financial impact of which is yet to be quantified.
