IndiGo’s Turbulence: Why the Stock Fell 10% and Flights are Getting Cancelled

If you have been following the news or planning a trip recently, you might have heard about the chaos surrounding IndiGo Airlines. The country’s largest airline is facing its biggest challenge yet.

This week, IndiGo’s stock price crashed by over 10%. This sharp fall came right after the news that the airline had to cancel around 500 flights. These cancellations, combined with strict new government regulations, have created turbulence for the company.

In this blog, we will dive deep into what is happening, why the stock fell, what the big banks are saying, and look at the company's financial health.

The Stock Market Reaction

The market reacted negatively to the operational situation. On Friday alone, IndiGo shares dropped nearly 3%, bringing the total fall for the week to 10.3%.

Why did this happen? When an airline cancels flights, two things happen:

1. They lose immediate revenue (ticket money).
2. They lose customer trust.

Investors are worried that these disruptions will hurt the company's earnings. However, despite this "sell-off," major global financial firms are not giving up on IndiGo yet:

• Citi and Morgan Stanley: Both firms (Citi and Morgan Stanley) have kept a "Buy" rating on the stock. This means they believe the company will eventually recover and grow.
• The Caution: However, Morgan Stanley has lowered its earnings targets for the financial years 2027 and 2028. They acknowledge that this crisis will hurt profits in the near future.

The New Rules: What Changed?

A major reason for this disruption is a change in rules by the DGCA (Directorate General of Civil Aviation), which is the "regulator" of the aviation world in India.

To ensure pilots don't get too tired and to keep passengers safe, the DGCA introduced new Flight Duty Time Limitations (FDTL). These rules were fully enforced starting November 1, 2025.

Here is what changed:

• More Rest: Pilots now must get 48 hours of rest per week (increased by 12 hours).
• Fewer Night Landings: Pilots are now allowed only two night landings a week (previously, they could do up to six).

How this affected IndiGo:
IndiGo admitted that there were "misjudgments and planning gaps" in adapting to these rules. Because pilots now need more rest, the airline needs more pilots to fly the same number of planes. They didn't plan this transition well enough, leading to a shortage of available pilots.

What Triggered the Crisis?

While the rules were a big part of it, other factors made the situation worse. IndiGo explained that a mix of issues created a "negative compounding impact" (meaning everything went wrong at once).

1. Crew Shortage: There was an acute shortage of cabin crew.
2. Rostering Issues: Because of the shortage, the "roster" (the schedule of who flies when) got messed up.
3. Cascading Effect: In aviation, if one flight is stuck, the next one gets delayed, and so on. This disruption hit major hubs like New Delhi, Mumbai, Bengaluru, and Hyderabad very hard.
4. Other Factors: Tech glitches and winter weather also played a role.

The airline has told regulators that they expect "full operational normalcy" only by February 2026.

Financial Health Check: Revenue and Profits

Now, let’s look at the numbers provided in the company's recent reports (September 2025 Quarter) to understand their financial standing.

1. Revenue (Money Coming In)
Despite the issues, people are still flying.

• Total Revenue: In the quarter ending September 2025, the revenue was INR 19,600 crore. This is actually higher than the same time last year (INR 177,590 million).
• RASK: The Revenue per Available Seat Kilometre (a measure of how much money they make per seat) slightly increased to INR 4.55.

2. Net Profit (What is Left Over)
This is where the problem shows.

• Net Loss: For the quarter ending Sep 2025, IndiGo posted a Net Loss of INR 2,614 Crores.
• Compare this to the previous quarter (June 2025), where they had a profit of INR 2,727 Crores. The airline has swung from a healthy profit to a massive loss very quickly.

3. Operating Profit (EBITDA)

• The Operating Profit crashed to just INR 545 Crores in Sep '25, compared to over INR 5,000 Crores in the previous quarters.
• Margins: Their Operating Profit Margin (OPM) is now just 3%. This means for every 100 rupees they earn, they are barely keeping 3 rupees before paying interest and taxes.

Conclusion

IndiGo is currently flying through a major crisis. With a 60% market share, it is the backbone of Indian aviation, but the combination of new safety rules, crew shortages, and planning errors has hit it hard.

The stock price reflects this panic, dropping over 10% in a week. While the revenue is still high, the costs and disruptions have pushed the company into a loss for this quarter. Investors and passengers will have to be patient, as the airline expects to stabilise fully by February 2026.

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