IndiGo Restores Normal Operations; Goldman Sachs Maintains 'Buy' Rating

IndiGo Airlines, India's largest carrier, has successfully stabilized its flight operations after experiencing significant disruptions in early December. The airline, which saw approximately 800 domestic flights cancelled daily between December 3rd and 7th, has now resumed its normal schedule of 2,000-2,200 daily flights, handling 460,000-490,000 domestic passengers daily. Despite these operational challenges, Goldman Sachs has reiterated its 'buy' rating for IndiGo, acknowledging its dominant market position and low-cost structure.

The December cancellations were attributed to a confluence of factors, including a critical shortage of 60-70 effective pilots, adverse weather conditions, technical issues with Microsoft systems, and the airline's lean operational framework, which amplified the impact across its extensive network. These disruptions led to regulatory interventions by the Indian DGCA, including a 10% slot reduction for the winter schedule, a suspension of Flight Duty Time Limitations (FDTL) norms for IndiGo until February 10, 2026, and a cap on airfares to protect consumers.

Goldman Sachs adjusted IndiGo's 12-month target price slightly to Rs 5,600 from Rs 5,700, primarily due to anticipated forex losses of Rs 1,620 crore from INR depreciation and the costs associated with passenger vouchers. The firm projects around 10,000 flight cancellations for December, resulting in an estimated 4.8% decline in available seat kilometers (ASK) for the quarter. However, Goldman Sachs maintains a positive long-term outlook, citing IndiGo's structural strengths, visibility on supply additions, and India's growing aspirational passenger base, while flagging risks such as rising jet fuel prices, rupee weakness against the USD, and potential capacity addition delays.