IndiGo shares may see pressure amidst flight turmoil; analysts warn of near-term strain

IndiGo's parent InterGlobe Aviation is expected to stay in focus on Friday, December 5, after a week marked by heavy disruptions across its network.

The airline has informed the aviation regulator that it expects to have its full schedule back in place by February 10. IndiGo has also sought temporary relaxation from certain night-time pilot duty norms, after a severe shortage of cockpit crew forced the cancellation of hundreds of flights through the week.

For the third straight day on Thursday, thousands of passengers were left stranded as the country's largest carrier struggled to adjust its rosters to new government rules.

According to the Directorate General of Civil Aviation, the cancellations stemmed mainly from "misjudgment and planning gaps" during the rollout of Phase 2 of the Flight Duty Time Limitations. The regulator said that IndiGo acknowledged that its actual crew needs turned out to be higher than anticipated.

What brokerages say

Citi has maintained a 'Buy' rating on IndiGo, with a price target of ₹6,500. According to the brokerage, IndiGo's management has attributed the recent disruption to a combination of unforeseen operational issues ranging from minor tech snags and winter-related schedule adjustments to bad weather, rising congestion and the rollout of the updated Flight Duty Time Limitations from November 1.

To restore stability, the airline has started reworking parts of its schedule.

Citi expects these adjustments over the next two days to help operations return to normal and gradually lift on-time performance.

Management also said passengers affected by the disruptions are being offered alternative flights or refunds. The brokerage added that the new FDTL norms limit rostering flexibility, which means a complete reset may take longer.

Morgan Stanley, which has an 'Overweight' rating on InterGlobe Aviation, slashed its price target to ₹6,540.

Morgan Stanley said that IndiGo is encountering rising cost pressures, though it believes this will be an industry-wide challenge. With capacity still tight, the brokerage expects fares to inch higher over time, helping offset some of the cost burden.

It mentioned that demand trends have improved, with domestic passenger numbers in November rising 7% year on year compared with a 2% decline in the second quarter of FY26.

Morgan Stanley has trimmed its FY27 and FY28 earnings estimates by 20% each to factor in higher cost-per-available-seat-kilometre assumptions.

The stock is currently trading at 9 times FY27 EV/EBITDA against its pre-Covid median of 8.5 times. The brokerage expects yield growth in Q3 FY26, followed by softer yields in Q4 due to a high base.

IndiGo's on-time performance has slipped sharply: it was 84% in October 25, dropped to 67% in November 25, and crashed to 19.7% on December 3.

Domestic passenger traffic has also taken a hit. Total flyers across airlines stood at 5.36 lakh on November 30 but declined to 4.74 lakh on December 3.

IndiGo, which holds a dominant 60% market share and is known for its punctuality, has said that the tightened duty hour framework has contributed to the disruptions. The airline did not comment on Thursday.

In a meeting with IndiGo's leadership, the aviation minister said the carrier had enough time to prepare for the transition to the new norms and conveyed dissatisfaction with its handling of the situation. The minister asked the airline to stabilise operations quickly and ensure fares do not rise during this period.

The impact has been felt across key airports. Bengaluru saw 73 cancellations on Thursday, Delhi around 30, Hyderabad 68, and Mumbai was slated to see 85 IndiGo cancellations, according to airport officials. A day earlier, more than 150 flights were cancelled.

Shares of InterGlobe Aviation slid 3.4% on Thursday and have dropped around 6% so far this week.

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