India’s largest airline, Indigo, expects to fly 200 million passengers a year by 2030, an 80% increase from 113 million passengers flying in 2024, due to its expansion from 439 aircraft to the end of the decade, and its fleet expanded from 439 aircraft to 600.
Senior executives at Indigo’s parent company Interglobe Aviation told Gurugram analysts on Wednesday that the airline will expand to lucrative international routes on its domestic network, making it 40% of the current 28% of international outbound traffic. It will also focus on premiums by adding more business class seats.
Analysts say the long-distance route is expected to drive the international expansion of Indigo. “It focuses on increasing the cost of aircraft ownership and improving fuel efficiency by 5% over the next five years,” Kotak analysts wrote in a March 20 note.
Valuation soars, challenges still exist
InterGlobe shares ended 2.3% on Thursday ₹5,093, gave it market value ₹$1968.07 billion ($22.8 billion). This makes Indigo the third most valuable airline in the world, behind United Airlines Holdings Inc. ($24.5 billion) and Delta Air Lines Inc. ($30.8 billion).
But in terms of revenue, budget operator Indigo is much smaller than comprehensive airlines like Delta — Indigo’s $9.2 billion revenue in 2024 was one-sixth of Delta’s $61.6 billion that year.
However, Indigo’s higher profitability (net income of $930 million), 62% of the world’s fastest-growing aviation market compared to Delta’s $3.5 billion profit has allowed investors to reward the airline with premium valuations.
Founded in 2006, Indigo has a leading edge in the number of passengers, making the Indian Air 2 far behind at a rate of 16.4%.
Indigo’s overseas focus also helps hedge against depreciation rupees, especially when its lease liabilities are denominated in US dollars. Depreciation of rupee against the dollar results in foreign exchange losses during October-December ₹The airlines are 14.564 million.
Supply Challenge
The ongoing premium and international push is expected to test the airline, which has built its strengths by operating as a budget carrier, and its current CEO, Pieter Elbers, is former KLM CEO who joined the airline in 2022.
But, like many global airlines, Indigo faces the dual challenges of engine problems and the availability of new aircraft. The engines provided by US engine manufacturers Pratt and Whitney have failed, resulting in the foundation of many aircraft, forcing management to take a leased aircraft. Currently, between October and December, the number of aircraft that have taken root has dropped from the 1960s to the 1940s in 2023.
Another challenge is whether it can continue to receive a plane from Airbus every week over the next decade.
“We have noticed that recent comments from Air India, IATA and Boeing have been linked to mismatches inadequate global demand and more mismatches in India,” Kotak analysts wrote in their notes on Thursday. “Key information: It’s hard to expect global delivery of aircraft within five years of order.”
“Indigo currently has an excellent order book with 925 aircraft that ensures one aircraft delivered per week to fiscal 30. The leniency of the Midway XLR will draw it from 26E to the service’s European market, while Indigo is set up as a network set up by indigo to the dmp-noffe damp-nountry to and offers from. Nuvama analysts Jal Irani, Tanay Kotecha and Akshay Mane wrote in a March 19 note that this could be North American.
