{"id":41692,"date":"2023-08-13T14:22:00","date_gmt":"2023-08-13T08:52:00","guid":{"rendered":"https:\/\/aviationa2z.com\/?p=41692"},"modified":"2023-08-13T14:22:04","modified_gmt":"2023-08-13T08:52:04","slug":"indigo-problems-in-q2-despite-profits","status":"publish","type":"post","link":"https:\/\/aviationa2z.com\/index.php\/2023\/08\/13\/indigo-problems-in-q2-despite-profits\/","title":{"rendered":"IndiGo Likely to Face New Problems in Q2, Despite Profits"},"content":{"rendered":"\n

GURUGRAM-<\/strong> Despite achieving its best-ever quarterly net profit of Rs 3,091 crore in the April-June period of the financial year 2023-24 (Q1FY24), InterGlobe Aviation-owned IndiGo (6E) Airlines<\/a> is likely to face problems in the near future, as indicated by analysts.<\/p>\n\n\n\n

Given this situation, most brokerage firms have chosen to maintain their ‘buy’ to ‘underperform’ ratings for the stock and their target price, reports Business Standard<\/a><\/em>.<\/p>\n\n\n\n

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Photo: avgeekwithlens\/ Harsh Tekriwal<\/a><\/figcaption><\/figure>\n\n\n\n

IndiGo Airlines Problems<\/h2>\n\n\n\n

For instance, Motilal Oswal Financial Services has upheld its ‘neutral’ rating on the stock, citing ongoing initial challenges the low-cost airline faces.<\/p>\n\n\n\n

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“While the aviation industry in India shows positive prospects and robust current demand, we observe various challenges that prevent IndiGo’s situation from being ideal.”<\/p>\nMotilal Oswal Financial Services<\/cite><\/blockquote>\n\n\n\n

Analysts suggest that IndiGo’s profitability might face challenges in the July-September quarter (Q2) due to lower fares in a traditionally less active period and increased fuel costs.<\/p>\n\n\n\n

The management has indicated that this situation could lead to a decline in yields by around 10-15 percent during Q2FY24.<\/p>\n\n\n\n

Based on estimations, the average 30-day forward prices for domestic flights (across the industry) have dropped by 15 percent compared to the previous quarter for Q2. In comparison, the 15-day forward prices have seen a 15 percent decline on a quarter-on-quarter basis.<\/p>\n\n\n\n

For IndiGo specifically, the figures indicate a 10 percent reduction in 30-day domestic forward booking prices and an 11 percent decrease in 15-day domestic forward booking prices.<\/p>\n\n\n\n

During the current Q2FY24 period, the prices of Aviation Turbine Fuel (ATF) have experienced a rise of 10.7 percent, reaching Rs 100.1 per liter.<\/p>\n\n\n\n

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Photo: avgeekwithlens\/ Harsh Tekriwal<\/a><\/figcaption><\/figure>\n\n\n\n

Fierce Competition and Engine Trouble<\/h2>\n\n\n\n

Analysts are also cautioning about the potential escalation of competitive pressures in the upcoming months. <\/p>\n\n\n\n

This is driven by events like SpiceJet (SG)<\/a> receiving financial infusion from its promoters (Rs 500 crore), the anticipated restart of operations by Go First (G8)<\/a>, and the issuance of the air operator’s permit to Jet Airways (9W).<\/a><\/p>\n\n\n\n

Amidst these developments, IndiGo faces increased aircraft grounding due to ongoing inspections of Pratt and Whitney (P&W)<\/a> engines.<\/p>\n\n\n\n

Comprehensive investigations are currently underway for these aircraft, and this process could potentially impact nine additional aircraft in addition to the 35 aircraft already grounded.<\/p>\n\n\n\n

Pratt and Whitney (P&W) are set to examine a total of 1,200 engines, with approximately 200 engines anticipated to be inspected by mid-September. In contrast, the remaining engines are planned for inspection over the course of the next year.<\/p>\n\n\n\n

\"IndiGo
Photo: avgeekwithlens\/ Harsh Tekriwal<\/a><\/figcaption><\/figure>\n\n\n\n

Buoyant Future Outlook<\/h2>\n\n\n\n

According to analysts, the potential emergence of a duopoly within the industry, with IndiGo and Air India (AI)<\/a> as dominant players, is viewed favorably for IndiGo’s prospects.<\/p>\n\n\n\n

This favorable outlook is attributed to several factors, including strong demand and the expanding international business landscape expected to contribute to passenger growth.<\/p>\n\n\n\n

Furthermore, the incorporation of extra-long-range Airbus A321XLR<\/a> aircraft into the fleet and enhancements in the cargo business are anticipated to bolster the airline’s competitiveness over the long term.<\/p>\n\n\n\n

Stay tuned with us. Further, follow us on social media for the latest updates.<\/p>\n\n\n\n

Join us on Telegram Group <\/a>for the Latest Aviation Updates. Subsequently, follow us on Google News<\/a>.<\/p>\n\n\n\n

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IndiGo Record the Highest Ever Quarter Profit of 3091 Cr<\/a><\/blockquote>