IndiGo Resumes Normal Operations After December Flight Disruptions; Goldman Sachs Maintains Buy
Goldman Sachs trimmed IndiGo's target price, citing forex losses and voucher costs, but remains positive on the airline’s dominant position, low costs, and growing passenger base.
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IndiGo Airlines, India’s largest carrier, has stabilised operations after a turbulent start to December, according to Goldman Sachs’ latest note. The airline had cancelled an average of around 800 domestic flights daily between December 3-7, but has now resumed normal flight operations with 2,000-2,200 flights daily. Daily domestic passenger volume stands at 460,000-490,000.
Goldman remains positive on IndiGo, citing its dominant position, low-cost structure, visibility on supply addition, and a growing aspirational passenger base in India. The earnings adjustments lead to a slight reduction in the 12-month target price to Rs 5,600 from Rs 5,700, but the firm reiterates its 'buy' rating with a 12.6% potential upside.
The disruptions prompted regulatory action, including a 10% slot reduction for the winter schedule, suspension of Flight Duty Time Limitations (FDTL) norms for IndiGo until February 10, 2026, and a cap on air fares. The cancellations were triggered by multiple factors: a shortage of 60-70 pilots in the effective crew, weather-related issues, technical problems with Microsoft systems, and the airline’s lean operational structure, which amplified the impact across its network.
Goldman Sachs notes that although IndiGo’s pilot crew has grown to over 6,000 from 5,456 on March 31, 2025, the effective crew during the disruption was 5,085 due to pilots on leave, under training, or on notice periods. The airline has been issuing vouchers to affected passengers to manage customer impact.
The firm expects around 10,000 flights to be cancelled in December, representing a 4.8% decline in the quarter's available seat kilometers (ASK). Despite these cancellations, year-on-year growth in ASK for the next quarter is expected to remain flat.
On costs, Goldman factors in a forex loss of Rs 1,620 crore following further INR depreciation in the current quarter, along with the cost of passenger vouchers amortised across the second half of the fiscal.
Goldman Sachs flags key downside risks including:
Rising Jet Fuel Prices – Fuel accounts for 35%-50% of costs, so any significant spike could affect margins.
Rupee Weakness versus USD – 72% of IndiGo’s costs are USD-denominated, including fuel and aircraft rentals.
Capacity Addition Delays – Any hold-up in new aircraft or flight capacity could further impact operations.
Goldman concludes that while the winter disruptions have affected operations and FY26 numbers, IndiGo’s structural strengths and market position underpin a positive long-term outlook.
