HSBC has reiterated its 'Buy' rating for InterGlobe Aviation, the parent company of IndiGo, despite the airline experiencing significant operational disruptions due to new regulations. The bank attributes the resilience of the airline's long-term prospects to its strong fundamentals and cost advantages over competitors.
The primary impact stemmed from the revised Flight Duty Time Limitations (FDTL) rules introduced by the Directorate General of Civil Aviation, which impose more stringent standards than in the US and Europe. These regulations have led to extensive flight cancellations, including nearly 4,500 flights in recent days, with the airline canceling over 11,000 flights across the fiscal year, affecting revenue and profits.
Management reported that network adjustments and regulatory compliance measures caused the cancellations. HSBC observed that some of the operational strain may also be linked to earlier pilot recruitment challenges during rapid fleet expansion. The airline's cancellations impacted revenue by Rs 12–14 billion and lowered EBITDA forecasts for FY26 and FY27.
Despite these short-term challenges, IndiGo has begun to recover, with improved punctuality and passenger support efforts, including refunds and ground arrangements. HSBC remains confident that IndiGo's core strengths, such as its cost leadership and extensive network, will enable it to weather current headwinds and maintain its competitive position in the industry.
