India's Indigo slides as flight disruptions roil travel, stoke cost concerns
IndiGo is reeling from its worst operational crisis after a pilot shortage last week, compounded by inadequate planning for new rules on crew working hours, triggered thousands of flight cancellations, stranded passengers and forced the government to intervene to curb a spike in air fares
Shares of India's IndiGo fell 7.5% on 6 January, poised for their worst session in more than a year, after a staffing crisis at the country's top airline triggered mass flight cancellations and fuelled concerns about spiralling costs.
The stock dropped to 4,974 rupees, its lowest level since 9 May.
IndiGo is reeling from its worst operational crisis after a pilot shortage last week, compounded by inadequate planning for new rules on crew working hours, triggered thousands of flight cancellations, stranded passengers and forced the government to intervene to curb a spike in air fares.
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On Sunday, the civil aviation watchdog gave the firm 24 hours to explain why it should not face regulatory action.
Analysts at Jefferies warned that the ongoing disruptions will inflate IndiGo's non-fuel costs and potentially add penalties if there is any regulatory action, while a weaker rupee pushes up dollar-linked expenses such as leases, maintenance and fuel.
IndiGo's expenses rose 18.5% to $2.45 billion in the quarter ended 30 September, eclipsing revenue of $2.06 billion, with forex costs accounting for 13.1% of total costs.
Meanwhile, shares of rival SpiceJet jumped 13.9% on 6 January.
IndiGo shares slumped 9% last week, marking their steepest weekly drop since June 2022, when a surge in COVID-19 cases hit air travel demand.
