$INDIGO

InterGlobe Aviation, the parent company of IndiGo, fell nearly 2.5 percent in Friday morning trade after the airline reported weaker-than-expected June quarter earnings, while a sharp rise in crude oil prices heightened concerns over profitability. Investor sentiment was also weighed down by a surge in global oil prices, with Brent crude hovering near the $100-a-barrel mark after Houthi attacks on oil tankers in the Red Sea intensified geopolitical tensions in the Middle East. Brent crude has climbed more than 13 percent this week, briefly crossing the triple-digit level for the first time in two months. The rally in oil prices poses a significant challenge for airlines, as aviation turbine fuel (ATF) remains one of the industry's largest operating expenses. InterGlobe Aviation on Thursday reported a sharp decline in profitability for the June quarter, as elevated fuel costs more than offset the benefits of higher fares. The airline's EBITDAR declined 34 percent year-on-year to Rs 37.5 billion, while EBITDA (excluding forex) fell 39 percent to Rs 32.9 billion. Although yields rose 21 percent year-on-year to Rs 6, driven by fare hikes, fuel costs increased to 44.1 percent of revenue, exceeding market expectations and putting pressure on margins. Despite the weak quarter, brokerages remain constructive on the airline's medium-term outlook. They expect passenger revenue per available seat kilometre (PRASK) to grow about 25 percent year-on-year in the September quarter, supported by robust travel demand and firm ticket pricing. Management also expects most of the temporarily curtailed capacity to be restored by the third quarter of FY27, which could support earnings recovery as fuel price volatility eases.