GURUGRAM- On Wednesday (April 10, 2024), IndiGo Airlines (6E), operated by Interglobe Aviation, became the world’s third most valuable airline, as its market capitalization exceeded that of Southwest Airlines (WN). The stock concluded the day with a 5% increase, reaching Rs 3,807 on the BSE.
Presently, the domestic airline holds a valuation of Rs 1762 crore. While Delta Air Lines (DL) ranks as the second most valued airline at Rs 3,044 crore, the Irish company Ryanair (FR) maintains its position as the world’s top airline regarding market capitalization, valued at Rs 3,375 crore.
IndiGo Now 3rd Largest in World
Despite challenges, IndiGo Airlines, a prominent player in India’s aviation sector, has showcased resilience and continuous growth. Recent reports highlight IndiGo’s robust operational performance, marked by an uptick in passenger traffic and load factors, indicating a healthy demand for air travel.
On March 15, the airline finalized an order for 10 Airbus A320neo aircraft. Additionally, according to a recent report by Nuvama, IndiGo is in the process of expanding its fleet to include A321 XLRs, aimed at tapping into mid-to-long-haul markets.
These additions will be integrated into the network within the next two years.
Jal Irani from Nuvama further notes, “The company also anticipates a rise in the international segment’s contribution to 30% by FY25 (currently at 27%). Furthermore, IndiGo has expanded its codeshare destinations to 49, including 35 within Europe and seven within Australia, compared to 33 in March 2023, marking a 49% year-on-year increase.”
Key Insights
The report further indicates that IndiGo commands a dominant position, holding 60% of the domestic aviation market share and a significant 10% share in the international market. This places it ahead of Air India (AI), which holds a 26% share, and various other players, collectively accounting for 44%.
Highlighting key insights from IndiGo’s Investor Day, Nuvama mentions, “Despite short-term supply chain constraints impacting IndiGo’s demand, the company anticipates robust growth in passenger (PAX) traffic and capacity, expected to increase in low double-digits by FY25. Despite over 70 grounded aircraft, IndiGo continues its aggressive expansion in the international segment, targeting a contribution of 30% to Available Seat Kilometers flown (ASKM) by FY25, driven by adding new destinations. Additionally, IndiGo boasts one of the lowest Cost of Available Seat Kilometers (CASK) globally, excluding fuel and forex, standing at USD 3.13.”
IndiGo’s extensive network and the industry’s duopoly-like structure are likely to bolster its profitability. The stock also signals the potential for growth, having doubled investor wealth in the past year.
According to Trendlyne data, 18 out of 21 analysts recommend buying the stock, while three suggest holding positions.
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