IndiGo shares plunge 7.5% as staffing crisis triggers mass cancellations

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Shares of India’s IndiGo INGL.NS fell 7.5 per cent on Monday, poised for their worst session in more than a year, after a staffing crisis at the country’s top airline triggered mass flight cancellations and fuelled concerns about spiralling costs.

The stock dropped to 4,974 rupees, its lowest level since May 9.

IndiGo is reeling from its worst operational crisis after a pilot shortage last week, compounded by inadequate planning for new rules on crew working hours, triggered thousands of flight cancellations, stranded passengers and forced the government to intervene to curb a spike in air fares.

On Sunday, the civil aviation watchdog gave the firm 24 hours to explain why it should not face regulatory action.

Analysts at Jefferies warned that the ongoing disruptions will inflate IndiGo‘s non-fuel costs and potentially add penalties if there is any regulatory action, while a weaker rupee pushes up dollar-linked expenses such as leases, maintenance and fuel.

IndiGo‘s expenses rose 18.5 per cent to $2.45bn in the quarter ended September 30, eclipsing revenue of $2.06bn, with forex costs accounting for 13.1 per cent of total costs.

Meanwhile, shares of rival SpiceJet SPJT.BO jumped 13.9 per cent on Monday.

IndiGo shares slumped 9 per cent last week, marking their steepest weekly drop since June 2022, when a surge in COVID-19 cases hit air travel demand.