Good evening, ladies and gentlemen, and welcome to IndiGo's conference call to discuss the fourth quarter and fiscal year 2025 financial results. My name is Yeshi Sri, and I will be your coordinator. At this time, the participants are in a listen-only mode. A question-and-answer session will follow today's management discussion. As a reminder, today's conference call is being recorded. I would now like to turn the call over to your moderator, Ms. Richa Chhabra, from the Investor Relations team of IndiGo. Thank you, and over to you.
Good evening, everyone, and thank you for joining us for the fourth quarter and fiscal year 2025 earnings call. We have with us our Chief Executive Officer, Pieter Elbers, and our Chief Financial Officer, Gaurav Negi, to discuss the financial performance and are available for the Q&A session. Please note that today's discussion may contain certain statements on our business or financials, which may be construed as forward-looking. Our actual results may be materially different from these forward-looking statements. The information provided on this call is as of today's date, and we undertake no obligation to update the information subsequently. We will upload the transcript of prepared remarks by day end. The transcript of the Q&A session will be uploaded subsequently. With this, let me hand over the call to Pieter Elbers.
Thank you so much, Richa. Good evening, ladies and gentlemen, and thank you for joining this call. We announce our financial results for the fourth quarter and financial year 2025 today. Before we begin, I must take a moment to address the recent tragedy that shook our nation. Following the tragedy in Pahalgam, our country has gone through a tough time, and our hearts go out to the victims and their loved ones. Now, turning on to our financial performance for the financial year 2025, we reported a total income of around INR 841 billion, which is 18% higher than the financial year 2024. This, by the way, ladies and gentlemen, is for the very first time we have reached a $10 billion mark in terms of revenues.
Excluding the impact of foreign exchange, we have reported a profit of INR 88,676 million, or INR 8,868 crores, maintaining a solid performance very much similar to last year. These results are a testament to our collective focus and strategic clarity. With the impact of foreign exchange, and that was a loss this year, we reported a net profit of INR 72,584 million, or INR 7,258 crores. As we reflect on the financial year 2025, the first half witnessed a temporary moderation in demand, led by the elections and the heat wave across our nation. By the beginning of the second half, we witnessed a remarkable surge in demand, primarily driven by festivities, wedding season, and, of course, the Maha Kumbh. For the fourth quarter of financial year 2025, we reported a total income of INR 231 billion and a net profit of INR 30.7 billion, or INR 3,068 crores.
This has been one of our best performances for the fourth quarter, as we achieved many milestones, including the highest number of customers served during any quarter and the strongest profit for the fourth quarter in any year since our inception. During the quarter, we saw a surge in domestic traffic, primarily driven by the Maha Kumbh. We responded swiftly to cater to this increased demand and optimized our network to operate incremental capacity to gate upgrades and additional frequencies to Prayagraj and a few other airports around the region. I personally also had the opportunity to attend the event, and I must say it was a truly surreal and humbling experience. The scale, the spirit, and the devotion I witnessed were unlike anything I've ever seen.
The overall demand during the quarter, including in international markets, was high, as we served around 32 million passengers, representing a growth of 20%, and international markets demonstrating an even stronger growth of over 30% on a year-over-year basis. During the financial year, we had the privilege of welcoming a total of 118.6 million passengers on board, around 1 million passengers every three days. With this, we closed the year on a growth in passengers of more than 11%. From families to business travelers, from first-time flyers to returning citizens, all placing their trust in us to fly them to their destinations safely and comfortably. I would like to thank each and every one of our customers for choosing to fly with IndiGo. In terms of aircraft deliveries, in the financial year 2025, we have added a total of 67 aircraft on a net basis.
During the year 2024, we received deliveries of 58 aircraft from Airbus as part of our original order book. This, by the way, represents around 7% of the total commercial aircraft deliveries by Airbus during the year. It gives us a lot of pride at IndiGo that we were the single largest receiver of Airbus aircraft globally. Here we are, an 18-year-young Indian airline with one of the largest order books, if not the largest order book, in the world, and taking the highest number of plane deliveries globally, representing our long-term vision, skill, and rising leadership in the global aviation landscape. Our investment in the world-class new generation fleet was recognized by CH Aviation, and we were recognized as the world's youngest aircraft fleet in 2025 in the category of airlines operating more than 100 aircraft.
This is a testament to our commitment of operating a world-class, young, and efficient fleet. Now, on the operational performance, we have taken a comprehensive series of initiatives, such as reviewing block times and enhancing some of our operational procedures, which have really helped us to reclaim our leadership position in terms of on-time performance from September 2024 onward. These initiatives laid the foundation. It was driven by the spirit of the power of we, as demonstrated by all IndiGo employees. This is a remarkable achievement at our scale, with operating more than 2,200 departures per day. Our IndiGo employees showed exceptional agility and commitment during the challenging times around the AOG situation, recent shifting of operations from Terminal 2 to Terminal 1 on Delhi Airport, and the CrowdStrike outage.
From ground operations to flight crews, maintenance to customer support, their commitment to performance, safe and hassle-free service has been nothing short of extraordinary. On the network side, we continue to invest in scale and readiness and further densify our domestic network by adding three more new destinations, multiple routes, and increased frequencies. Today, we operate out of 13 different bases in India to these 91 destinations, and our foundation remains deeply rooted in India, and now we operate such a well-diversified network of nearly 490 routes domestically. It is a diversity of our network that plays a key role in safeguarding our operations during these times of disruption. More recently, this was tested in May, wherein our operations from 11 airports in the northern part of India were suspended for a period of eight days, leading to cancellation of around 170 daily flights.
Our IndiGo teams, and especially the teams in the northwest region, rose to the occasion, supporting one another, and most importantly, caring for our customers with empathy. Operationally, the impact was limited as we continued to operate more than 2,050 daily flights, with strong domestic load factors of around 83% on the remainder of the network during that very same period. Internationalization remains a key focus strategic area as we added an impressive seven new destinations across Asia during the financial year. Actually, when I joined IndiGo three years ago, we had around 25 international destinations, and we closed this financial year 2025 with 40 international destinations. Now, last week, we have added Pujera, being our 41 international destination. That's nearly 65% growth within a period of less than three years.
We have expanded into newer countries, regions, and continents, with enhancing connectivity to North and Central Asia, to the West with a flight to Nairobi, and to the East to Indonesia. However, when it comes to international travel, India remains highly underserved. The further you go, the lower the market share of Indian operators is becoming. This presents us with a huge opportunity to expand into further markets. In terms of international capacity share, we have reached around 30% of our total ASKs being international this year, and we have projected that to go up to over 40% by the end of financial year 2030. As part of our broader strategy, we signed an agreement to damp lease six 787s, wide-bodies, with Norse Atlantic Airways.
We have already deployed the first 787 on the Delhi-Bangkok route, and we have received a positive response from our customers, and we will be receiving the other five during the second half of this financial year. Starting July, and it is going open for sale today itself, we will be further expanding our horizons and will launch Amsterdam and Manchester from Mumbai using damp-leased aircraft. This marks an important milestone in our journey to competing meaningfully on long-haul routes and set the foundation of our wide-body operations. During financial year 2025, we have launched a series of new initiatives, including our business product Stretch and our loyalty program, Blue Chip. We have launched Stretch on five domestic routes so far with 16 aircraft. In addition, we have also launched Stretch on the Delhi-Bangkok route on our damp-leased 787.
Going forward, as we get more deliveries, we'll continue to add routes with this Stretch product. On the loyalty program, around 2.9 million, and by the time this call is finished, probably 3 million customers have already signed up for the program in just seven months. We've announced partnerships with brands such as Accor and Swiggy, which will help offer a value proposition that will drive deeper member engagement and loyalty. Apart from this, these partnerships will also provide us with additional revenue. The year 2025 is an extremely exciting year for Indian aviation, with two upcoming events. The first one, after 42 years, the prestigious IATA AGM will be returning to India, with IndiGo inviting them and, as such, being the host airline. It comes at a very appropriate time when the global rise of India and Indian aviation is so much on the forefront.
We are proud to welcome the global aviation community to India in, actually, as of next week, providing an opportunity to reaffirm IndiGo on its path of becoming a global aviation giant. The two mega cities of India, Delhi and Mumbai, will have a second airport, and we have committed strongly to both new airports. We have had the honor of doing the first test flights, actually, at both locations. IndiGo is committed to develop connectivity through these new airports, and as of now, we're expecting to commence operations at these two airports somewhere during this year. Together, all these initiatives form a cohesive strategy, not only aimed at achieving our vision of making IndiGo into a global aviation player, but also help us to realize India's vision of developing India into a global aviation hub.
We are focused on our path ahead through a well-defined strategy and our investing for the future. We remain focused on the execution of our strategy, anchored in strong operations, cost leadership, and a future-focused mindset. In this direction, we're accelerating our international expansion, adding more destinations, wide-bodies, and XLR aircraft. This will be a major step in building our global footprint. To conclude, we closed the financial year with robust financial stability, and our retained earnings have also turned positive, and our balance sheet reflects a strong financial position. Let me now hand over to Gaurav to discuss the financial performance in further detail.
Thank you, Pieter. Good evening, everyone. For the year ended March 2025, we reported a net profit of INR 72.6 billion, with a net profit margin of 9%, compared to a net profit of INR 81.7 billion for the year ended March 2024.
Including the foreign exchange impact, we delivered a profit of INR 88.7 billion, closely aligned with our performance in the financial year 2024. This consistent performance underscores our disciplined execution, operational efficiency, enabling us to effectively manage cost pressure while staying on course with our strategic goals. We reported an EBITDA of INR 212.5 billion for the year-ended March 2025, compared to an EBITDA of INR 175.4 billion for the year-ended March 2024. We reported a passenger revenue of INR 697 billion for the financial year 2025, a growth of around 15% against a capacity increase of 13%, primarily driven by improvement in unit passenger revenue. Now, on to the quarterly performance. For the quarter-ended March 2025, we reported a net profit of INR 30.7 billion, with a margin of 13.8%, compared to a net profit of INR 18.9 billion and a net margin of 10.6% for the quarter-ended March 2024.
This translates into a net margin improvement of 3.2 percentage points, driven primarily by improvement in unit passenger revenue and continued favorable fuel environment. Further recognition of our strong financial performance and stable financial position, we are declaring a final dividend of INR 10 per share, subject to the approval from the shareholder in our incoming AGM. This marks a significant milestone in our post-pandemic recovery journey, a testament to the clearly defined strategy. We are committed to consistently deliver long-term value for our shareholders. For the quarter-ended March 2025, the unit revenues came in at INR 5.26, which is almost 3% higher on a year-over-year basis. The yield improved by 2%, and the load factors came in strong at 87.4%, an improvement of 1% on a year-over-year basis, driven by the Maha Kumbh and an extended wedding season.
On the cost side, the fuel caps reduced by 6.6% on a year-over-year basis, primarily due to a reduction in average fuel price. INR 2.94 cash ex-fuel exports came in, which, in a sequential manner, is higher by 1.4% and 2.8% higher on a year-over-year basis, driven by annual escalations in the maintenance costs and airport charges, the impact of the currency depreciation on the dollar-denominated expenses, cost increases as we execute redeliveries of our aircraft through the global MROs, and this is offset by savings from reduction in the number of groundings on a year-over-year basis. We remain focused on cost leadership and are actively leveraging operational synergies to keep our costs range-bound in the coming year. Now, moving to the aircraft on-ground situation, we reached the peak number of groundings in Q2 of financial year 2025.
The number of AOGs had been reducing since Q2, from the mid-70s to 60s in Q3 to 50s in Q4, and currently in the 40s. It is our team's agility and executional capabilities which enable us to meet our capacity guidance despite the grounding situation. In terms of the fleet, during the year, we inducted 67 aircraft on a net basis. This included 33 aircraft which have been inducted through our entity in the GIFT City. With the reduction in grounded aircraft and steady flow of incoming aircraft, we have also started to redeliver the damp-leased aircraft. We redelivered eight aircraft in the March quarter and another five in April. Going forward, we'll continue to assess the demand and supply situation to adjust our damp-leased capacity. Our balance sheet is strong, which is underpinned by the financial prudence, disciplined capital allocation, and a robust capital structure.
I'm pleased to share that this financial strength has been firmly recognized through our debut international credit rating, where we are assigned an investment-grade rating by a leading global credit rating agency, Moody's. This initial assessment highlights our strong liquidity position, sound capital structure, and the financial headroom to pursue our strategic goals. Further, our liquidity has further improved as we ended the March quarter with a free cash of INR 31.5 billion. This translates to an increase of INR 42.5 billion as compared to the December quarter. During the quarter, as part of our cash utilization initiative, we have purchased two ATR aircraft in the quarter. With this, we have a total of eight owned ATRs.
During the year, we've also invested in our training facilities and have added four new iFly training centers during the financial year and made investments in digital initiatives such as NDC and advanced revenue management systems. We ended the quarter with a capitalized operating lease liability of around INR 480 billion and a total debt, including the capitalized operating lease liability, of INR 668 billion. On the right-to-use asset as of the quarter end, we were at INR 491 billion. Now, for the financial year 2026, we've already provided a capacity guidance that we will broadly grow our capacity by early double digits as compared to the financial year 2025. For the first quarter of the fiscal year 2026, we expect to add mid-teens capacity compared to the same period last year. April performed well from a revenue standpoint.
However, following the geopolitical disruption, we have seen some impact on our overall revenue environment due to increased cancellation and impact on the booking trend. We are closely monitoring the evolving trend to assess the impact on track for Q1 2026. As Pieter mentioned, we have launched a number of initiatives during this year in the direction of our broader vision of becoming a preferred airline globally and to represent our nation with pride. All these initiatives are the building blocks of this unified and long-term strategy. As we scale new heights, our investment-grade rating stands as a testament to our robust financial health and prudent governance. Coupled with our continued commitment to shareholder returns, the announcement of the dividend reflects our confidence in the business and our disciplined capital allocation strategy. We remain well-positioned to deliver sustained value and lead from the front in the years ahead.
With this, let me hand it back to Richa.
Thank you, Pieter and Gaurav. To answer as many questions as possible, I would like to request that each participant limit themselves to one question and one brief follow-up question if needed. With that, we are ready for the Q&A. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We'll take our first question from the line of Binay Singh from Morgan Stanley. Please go ahead.
Hi team. Thanks for the opportunity.
Congratulations on good set of numbers and best wishes for the long haul foray. I'd actually just ask Gaurav to comment a little bit more about the trend in yields and cancellation that he talked about. Have we started to see improvement in those trends, or we've not seen any pickup over there? If you could comment a little bit about what are you seeing on the yield side also?
Like I mentioned, Binay, in my script, April was very, very strong. Both in terms of passenger growth as well as yields, they were holding. It was coming to be very, very strong. The moment that the geopolitical event kind of transpired, we've seen a significant amount of cancellation that has also started to happen.
Between the period of April 22nd till, I would say, a few days back, the cancellation and the booking trends have taken a sharp decline. What we've started to notice in the last few days, at least, is that has stabilized and has started to uptick now. To what extent it's going to bounce back and how quickly is it going to bounce back is something that we are monitoring. At least from our vantage point, we've seen the worst in terms of the peaking of the cancellation and the booking, but the trend has started to reverse. We are hopeful.
We are still very optimistic and hopeful that it'll probably may end as well as June, which is one of the holiday periods, at least in India, is probably going to see a recovery quickly, the same way that we have seen the geopolitical events also last for only a few days. Hopefully, the trend of the cancellation and booking will also turn around quickly, and we'll have a very strong June. This is, again, our optimism. Let's see how it transpires.
Right, right. Thanks for that. My second question is, globally, when we look at low-cost long-haul foray, we've seen very mixed results across airlines. As IndiGo is starting onto this journey, what are the challenges that you anticipate, and how is IndiGo or the IndiGo product changing, or you're planning to change it to cater to that?
I think you should make a—let me answer this question. I think, if I may, you should make a difference between low-cost and low-cost operations or a low-cost basis, if you wish. I think IndiGo prides itself, and we remain committed to that, to be an operator with a very low-cost basis. That has not meant domestically that we're having a product which is not from high quality. On the contrary, courteous, hassle-free, on-time performance, and affordable fares. That has been the basis of success for IndiGo. What we have done, though, with the start of the operation into Europe, we will adjust our product to what is required for Europe.
We will have meals all across the aircraft as part of the overall price proposition on the flights to Amsterdam and Manchester, and we have our premium product, IndiGo Stretch, being available on those flights as well. That does not mean any change in the domestic and regional proposition, and actually, it is encouraging to see at other parts of the world where they basically go back to exactly the proposition IndiGo is already having on its domestic and regional network. I think IndiGo is on the way to become a global aviation giant, and this is precisely part of that trajectory. It may be good to add that even for the XLR, we have announced a dual-class configuration as well.
Great, great. Thanks, Pieter, for that response. I'll come back in the queue.
Thank you.
We'll take our next question from the line of Amyn Pirani from JP Morgan. Please go ahead.
Yes. Hi. Thanks for the opportunity. My first question is that if you could help us understand the sensitivity or quantify the impact that the closure of the Pakistan airspace could have on our operations and costs.
Take a step back and look to the network of IndiGo and here really the strength of a strongly diversified network, and operating from a country with a large geographical scope is really helping us. To put things in perspective, IndiGo operates 131 destinations. Due to the closure of the Pakistani airspace, we have suspended two, Almaty and Tashkent. Out of the 131, two have been suspended. If we look to the other flights, it basically impacts around 19 routes and a total of around 30 flights.
Out of the 34, I think is the precise number, but it depends a bit on winds and directions and all. Looking at that, we have 2,200 daily flights, and there we have a total of 34 being affected within the range of 20-30 minutes of additional flying time, which, of course, there's an impact financially when it comes to bringing in additional fuel. If you look to the overall scheme of things at IndiGo and the size of the operation to other bureaucracies, the impact for us is relatively limited. These flights is a low single-digit number as part of the total of our flights being affected.
Okay. Thanks for that. My second question was on, broadly speaking, codeshare as a whole, how much does it form part of your overall revenues?
If you can help us understand how does the accounting work, is codeshare a direct flow-through to profit, or are there costs associated with it? If you can just help us understand that, that would be really helpful.
Yeah. Without making it into a masterclass, codeshares, let me simplify it. We have two types of codeshares. One, codeshare foreign operators are having their code on IndiGo's domestic flights. Virgin Atlantic flight from London to Bangalore and connects Bangalore to Goa on IndiGo. There we get a certain amount of INR on that flight. That is an arrangement we have with about 10 different airlines in place, and that is actually increasing a lot. With the network of IndiGo and, for example, the recent signing up with Japan Airlines is really helping us. That has increased a lot.
It's still a single-digit number, but it has increased a lot compared to a few years back. That's one codeshare we're having. The other codeshare we're having is a codeshare where we fly to a certain point, and then beyond that certain point, we codeshare on someone else. That is what we have with Turkish and with Qantas. We fly to Singapore from Chennai to Singapore, and there we connect on Qantas to Perth for that matter. Your second question, how does it accounting-wise work? That works very simple. We have agreed on a certain price for that Singapore-Perth, and that means we collect the overall price for the entire journey from the customer, and we pay Qantas for the remaining part. Also, that has really increased over the last few years.
Again, Turkey is one of them with the two flights connecting over Istanbul to the rest of the network, and the other one is Qantas.
Any broad number of our revenues, how much is the codeshare? Is it a significant number, like 5% or less than that?
If you look to the margins we operate and the overall margin, we operate at this quarter, we publish a 9% margin. Even if it's a single-digit number, it's additional revenue, which is very helpful for us.
Understood. Understood. Thanks for that. I'll come back in the queue.
Thank you. We'll take our next question from the line of Krupashankar , NJ, from Avendus Spark. Please go ahead.
Hi, and thank you for the opportunity. My first question is on the business.
Can you please highlight something about if you can share the load factors of businesses in the domestic market? That would be really helpful. Or probably give quality comments on the traffic, what you're seeing on new routes which you have started.
Thank you. Stretch is still in the implementation phase. We started in November with Stretch. We started on Delhi-Mumbai, and that route was completed. All the 20 daily return flights were operated with Stretch. By now, we have six domestic routes in operation and a total of 16 planes. Out of the 16 planes, they're operating on these six routes, and we basically continue to add one plane every week on that in order to come to the total number of around 40 different planes. Sorry, 40 planes with the Stretch configuration. I think it's a bit too early to go into specific load factors.
We see that the routes which are very well established, like Mumbai-Delhi, they're operating strong and solid, and we see some sort of initial additional attention needed on the new routes like Delhi-Chennai. There, and I'm very confident that we'll see the same as we saw on Delhi, by the time that all the frequencies are operated by Stretch, we'll see an increase of load factors because especially that segment of customers has the tendency to move from one flight to the next. It's important to have all the frequencies being operated on that. I guess by the end of this calendar year, all the flights are operated, and we will be able to have a proper evaluation of these load factors.
Thanks for that. My second question is on the international side.
Is it possible to split between the usual and VFR and business demand on your international routes?
No, not really. I do not think you will be surprised if we find that quite a few people combine VFR and business-related travel also. We are not really having that split being made. Where we see that clearly, the strength of our network with domestic and international, to have it both, is really helping us for the customers to create a more holistic travel solution. The fact that our Blue Chip program, we have like 3 million people who have already signed up, I think is a demonstration to the fact that we have that combination of an incredible domestic coverage with 490 routes and an increasing international presence. That presence, international, just like domestic, is actually serving all these different segments ranging from VFR to business.
The new routes, Amsterdam and Manchester, I think are a great example of that as well. We see tourists from Europe coming to India. We see business travelers, and we will see VFR as well. They have gone in sale, in the open for sale from today, and we are confident that we will see a similar mix as we see on other routes.
Thank you. Last question, if I may. On the cost side, cost escalation side in 2026, what are the major escalations you are forecasting? Any mitigation measures with respect to forex side, if at all? How have you taken that forward? Some thoughts over that, please.
Addressing the second part, Krupar, we have shared with you the FX hedging strategy that we have laid out in a couple of calls that we have had in the past.
We continue to push that particular piece where we said that we'll continue to hedge our positions related to 12 months out, any cash outflow that we have, net of any inflows that are there. We continue to pursue that on the FX side from a currency standpoint. Also, the fact that we continue to scale up our international operation, that itself is also going to create a natural hedge for us. As far as the first part of the question is concerned, the cost side. There is going to be a natural escalation that is going to be there in the contracts that we have, whether it relates to maintenance contracts, whether it relates to the airport charges. These are elements of cost that are going to be there.
What we mentioned in my script also is the fact that we're trying to hold the cost at the similar levels of 2025. Reason being, we had a large part of our AOG mitigation strategy, which was damp leases. We are scaling down those damp leases as some of the aircraft, which were AOGs, are coming back. Those offsets will enable the increases that we are going to have, inflationary increases that we have in all the line items that are there. We are making an attempt to make sure that the cost levels remain at the same levels that we had in 2025 because we have seen an uptick in 2025, largely because of the increased damp leases that we had introduced to offset the AOG situation that we faced.
Thank you very much for line answering my questions. All the best. Thank you.
Thank you.
We'll take our next question from the of Kushagra from CWC Advisors. Please go ahead.
Yeah. Hi. Thanks for the opportunity. Just two questions. One, if you can, so on your international expeditions with 40% international ASK target, if you can give us a sense on what kind of share you're anticipating among Indian Airlines ASK overall when you reach that target, and how much of this you're expecting from the long-haul travel once you reach that 40% international ASK target?
I think when you look to international, we should not look at what is the share of the Indian, what is our share in the Indian sort of market space. We should look at what's the total Indian and foreign operators and what would be our share in that.
I think what's extremely important is that if you take a step back, probably seven, eight years ago, the share of Indian operators as part of international traffic was in the mid-30%. It was like 65% by international operators, 35% by Indian operators. Over the last years, and thanks to a lot of the expansion of IndiGo, we have now moved to a share of Indian operators more in the range of 45%-46%. That is still tilting very much to regional capacity. The further you go away from India, as I mentioned, the lower that share is becoming. I think the opportunity is really to make sure that, for example, Europe, and that's part of our announcements today, the share of Indian operators is about a third. Two-thirds of all the traffic is going on non-Indian operators.
The direct flights, that's for the direct flights only, and then there's still a lot of indirect flights as well. The opportunity in that field is massive. Like for domestic, we're not setting a market share target. We do not do it for domestic, neither do we do it for international. I think with the product and the cost basis IndiGo is having, we should be able to get a significant share of that market on IndiGo flights.
Sure. There was one more part of the question, which was how much of your international would be, you're thinking of doing long-haul only in that 40% international ASK target?
It becomes a bit of a question. What is your definition of long-haul?
The XLR is actually for us a very important tool, which is somewhere between the precise definition of long-haul, 9-plus hours of flying, and the definition of regional, 5-6 hours of flying. Exactly in that space, the XLR will have a great opportunity for us to do that. We are very bullish on having those planes coming in and start to operate the routes, for example, Delhi to Nairobi or Delhi to Bali, which today are both Nairobi and Bali are being operated, but from Mumbai and Bangalore respectively. The opportunities are huge. If you just look to our fleet composition, the wide bodies eventually in 2030 will be in the range of 30 on a total fleet basis of around 600 aircraft. That 600 narrow-body aircraft will have a lot of regional operation and XLR.
That's how we come to this number in ASKs, but real long-haul is going to be limited to the 350s.
All right. Sure. The second question is actually, can you tell us more about your capital allocation plan in terms of how much you're going to allocate between, let's say, dividends, keeping cash on balance sheet, buying planes and engines, and the AIP investments, which we had called out earlier? A broad understanding there. Again, on the capital allocation, we've been proven, like we said, that we've been now rated investment-grade by Moody's also.
The broad allocation that we've given in the past also is a large part of our cash is going to be deployed towards keeping a safety net. As a thumb rule, we've mentioned that it's going to be somewhere around the 20-25% of our overall top line.
That's going to be a safety net that we continue to carry. As our ownership model changes, we look at that particular percentage. Outside of that, the allocation is going to be largely towards our growth initiatives that we are driving. Towards that, the biggest part has been our digital initiatives that we are launching, massive amount of investments we are doing in various digital tools for us to prepare for the growth that we see and the infrastructure that we need to build by 2030. There's investments happening towards that. We've also highlighted that we've started to acquire assets. We mentioned that we've acquired eight ATRs. We started small because in order to deploy our cash towards student allocation, we started small. We started to own assets, which are ATRs, as well as we are looking at acquiring and owning the engines.
In a way, we are being a little, we are prioritizing in terms of where we are deploying capital. Beyond that, whatever is going to be available is going to be kept for the purposes of acquisition of all forms of aircraft, which is going to be narrow bodies or for the wide bodies that are expected to start coming in 2027. They may not be an outright purchase in its entirety. It could be a higher contribution of equity that we may want to do for the finance leases that we are doing. That is the broad construct of the capital allocation that we are doing. We have recently also, we have kind of recommended, and we will go to the AGM for the shareholders to approve, a dividend in order to reward our shareholders also. That is also part of our capital allocation strategy.
All right. Thank you.
Thank you very much. Thank you. We'll take our next question from the line of Prateek Kumar from Jefferies. Please go ahead.
Hello. Yeah. Good evening, everyone, and congrats for great results. My first question is a bit of a clarification on your capacity growth. Have you increased your capacity growth guidance from early double-digit to mid-teens expectation now?
No, Prateek, the early double-digit is for the whole year. What we have set for the mid-teens is for Q1 of 2026, this quarter.
Sure. In relation to the redeliveries that is expected to moderate into the later part of this year, that is what we are sort of expecting.
No, sorry. I didn't catch your question.
Because of redeliveries of aircraft and maybe the returns of damp leases of aircraft, the growth is slightly coming off from mid-teens expectation in first quarter.
That's what we are looking at during the year.
I'll just repeat. What we have guided is for the whole year, there is going to be early double-digit increases on the capacity side. We have closed this year with 157-odd billion of ASK. There is going to be an early double-digit growth in this capacity. Now, contributing to this capacity growth is going to be additions in terms of new aircraft coming in, as well as redeliveries also happening. It is all factored in when we give an early double-digit guidance for the portfolio. Now, when we come to the quarter, which is Q1 of 2026, we are saying the capacity increase is going to be in the tune of a mid-teens level from where we are today. It is going to be year- over- year.
It's going to be an increase of mid-teens from Q1 of 2025 to Q1 of 2026. There's going to be a mid-teens increase in capacity.
Sure. Another question is regarding recent geopolitical tensions that have had recent furore against Turkish relationships across businesses. How do you see your partnership of damp lease with Turkish Airlines, which is also coincidentally up for renewal by the British content? Do you have any mitigating measures there if it ends there? How does that particularly work with your codeshare agreements for particular connections which are related to that partnership? Thank you.
Let me take that one. The flights between India and Turkey are governance and are within the framework of the air service agreements between the two nations. I think that's one.
Two, the operations which are taking place are fully compliant and in line not only with the regulatory framework, but also by all the rules and regulations from the government. Certainly, we had and we still have lots and lots of Indian customers booked on these flights, mostly connecting over Istanbul and flying to other parts of the world for their travel needs. On the renewal, that's up for the government to decide on that. We have this operation in place for some time now. It has served the Indian customers well and whether it is compliant and the government has the view on what is the overall landscape and the overall setting and the holistic picture, and we operate within that guidance and framework.
The related question was if this relationship doesn't continue beyond May.
Does that change anything in terms of business because you have a number of codeshare agreements which help connection to other destinations in Europe?
As a good airline, we make sure that we have full back plans in case of changes. I think we have demonstrated over the last years, be it domestic, be it international, be it the topic we just discussed around the closure of Pakistani airspace, we will deal with it and we adjust our network accordingly. For now, we focus on serving our customers and making sure that they can go to and come from their final travel destinations.
Thank you.
Thank you. We will take our next question from the line of Ankur Periwal from Axis Capital. Please go ahead.
Yeah. Thanks for the opportunity again. Congratulations for a strong set of numbers.
First question on your thoughts on yields, given where fuel prices are and sort of some paths over there. How are you looking at yields there? The commensurate question will be on the spreads. Your thoughts there, how do you see them happening over the next FY 2026?
Ankur, we usually do not give guidances around the yield. It is very difficult to give guidance even for the quarter right now because of the recent events like we mentioned. Where the yields are going to settle is something that we will have to monitor. They have obviously gone down given the events that have happened between May 7th and May 10th. We are hopeful that there is going to be a recovery both in terms of the booking as well as the yield. It is very hard to give a guidance right now where Q1 is going to be.
Beyond that, we usually do not give a guidance. We are hopeful that things will come back to normal. The yields have held up. If you look at the entire 2024, 2025, the yields have held up to be strong. They have increased year- over- year. We are again hopeful. Given the recent events, it is very difficult to call out where Q1 is going to be, let alone what the total year is going to be like.
Sure. Appreciate that. Just secondly, a clarification. You did mention earlier that overall costs are expected to be flattish for FY 2026. If we are comparing FY 2025, I am presuming this is ex-off fuel cost?
Yeah. Even ex-off fuel cost. Fuel is going to be a way to fuel has been favorable, like we mentioned in our commentary also. It has played to be favorable.
Where I mentioned the offset of the cost is going to be, the extent of the damp leases that we had is going to scale down. The offset to that is going to be the increased normal escalation that one experiences across various line items.
Okay. That's it from my side. Thank you.
Thank you. We'll take our next question from the line of Achal Kumar from HSBC. Please go ahead.
Yeah. Hi. Thanks for taking my question. First of all, going back to the Pakistan airspace closure, I mean, do you see any changes to your network plan or strategy towards your long-haul international operations? I mean, you have announced flights between Mumbai and these two pre-announced destinations, Amsterdam and Manchester, although Delhi is the biggest international hub, and we're talking about Delhi quite a lot. Has that decision been impacted because of Pakistan airspace closure?
How do you see that? Have you done any exercise on your brand awareness score in the international markets? Because that is very important for the inbound international tourism.
Thank you for that. When we look to, let me cut the answer into three parts. Our two-day network, I mentioned it before, we suspended Tashkent and Almaty. The remainder of the 19 routes is a bit longer, and no further changes are being expected. We continue to operate, and there is no change in that. That is one. Two, when we look to our further international expansion, today we only have one 787, and the others are coming in in the second half of this year. We still have time to take a final call. I think we have a good habit not to make our competition anything more, sharing anything more than strictly necessary.
We keep it to the very last moment to disclose from where these flights are operating. I think the opportunity of India really is with 787s. We can operate them from pretty much any hub we have in India into Europe. I mean, we've chosen Mumbai for this hub, but we can operate it from pretty much anywhere. Even outside Delhi and Mumbai, we have opportunities. Specifically for Amsterdam and Manchester, I think the opportunity is great for actually both cities to be connected into Mumbai. Our connecting network in Mumbai is not as strong. You're right in that. It's not as strong as it is in Delhi. Yet it does have actually quite a couple of good connections even to the southern part of India where some of these flows are going.
We have made that evaluation, and we figured that this was actually a very good way of starting this operation. When it comes to brand awareness, you're absolutely correct that the brand awareness is an important topic. In one of the earlier calls, I'd shared the fact that we do have these codeshares. Even in today's call earlier, there was a question on codeshares. The fact that we have codeshare agreements with British Airways, Air France, KLM, Virgin Atlantic, and they all have their customers on our domestic network means that there's quite a lot of Europeans today who are increasingly aware of these flights. By the way, by the time they figure out that these are competitive fares and that affordable fares of IndiGo are now also available in Europe, that would, I'm sure, stimulate and create demand from Europe into India and even beyond. Okay.
Perfect. Thanks, Pieter. My second question is around, again, the international operations. How do you see the opportunities for your ancillary revenue, given that you are planning to sell hot meals and also the cost will go up? Do you have plans to increase your ancillary revenue, say, cargo or any other ancillary revenue to offset that cost pressure? Obviously, when it comes to the international operations, I think it is very important on the FDTL thing. Do you see any challenges there on the FDTL side?
Yeah. Allow me to say that these are two very different things, FDTL and ancillary revenues. I guess you just used the opportunity to address both questions, which is perfectly fine. When it comes to ancillary, you're absolutely right. Cargo is an important aspect.
I mean, the start which we have done, and it's actually quite nice for us that we have taken a lot of initiatives over the past few years, which were, I guess, needed some explanation for people to see where it was leading to. We inaugurated the narrowbody freighters some two and a half years back, and we have a few of them in operation now. When we started our flights into Bangkok with the 787, actually, we saw suddenly cargo loads of 8, 9, 10 tons per flight, obviously significantly larger than the kilos we carry on the narrowbodies. The opportunity for cargo really is very, very significant in terms of flights operating.
I think it nicely coincides with the fact that, one, made in India is becoming more and more prominent in terms of India as a global production hub, not only as a service but also as a global production hub. I think very much in line also with the vision of the Indian government. If we look to the share of international cargo on Indian carriers, and we spoke earlier about the share of passengers on Indian carriers, on cargo, it is actually often a single-digit number, which is the share on Indian operators. That means all the rest is going on foreign operators. The opportunity for us to take some of that international cargo on our wide-body flights is really fantastic. The focus will be clearly on that.
I think for the meals, it's clear that for flights of these distance, to make an operational feasible product and to make sure that our customers have a holistic proposition, we opted for this one. I think that will resonate actually very well in the market. FDTL for these flights is not so relevant because these are so-called damp leases. The cockpit is being operated by the operator, Norse in this case. For domestic, clearly, the FDTL will have some impact, but that's a very different discussion than these long-haul operators. Again, for the first phase in July onward, it looks like that there's a low single-digit impact on that for that phase. Again, that domestic has nothing to do with the international piece.
Perfect. Thank you so much, Pieter.
Thank you. We'll take our next question from the line of Jinesh Joshi from PL Capital.
Yeah. Thanks for the opportunity. I think you mentioned that we redelivered about eight damp lease aircraft in Q4. And I think more five are to be redelivered in April. If I look at our aircraft and engine lease rental cost, I mean, it has increased to about INR 64 crore. Perhaps this could be due to the escalation in lease rentals. How should we think about this cost going ahead? I mean, is it that the benefit of lower AOG, which was in Q4, as you mentioned in your commentary, will be eaten away by the higher rentals going ahead? Your thoughts on that?
The increase that you saw was on account of more damp leases that had come in. When you start comparing it, probably sequentially also. If you look at Q2, there was a delta in terms of the rates that were applicable.
Q2 of this or Q2 of 2025, the significant increase in the damp lease was on account of the summer rates that we had mentioned. That started to moderate down as we went into Q3 and then Q4. At the same time, the number of damp leases has also increased when we had gone into Q4. Sag end of Q4, as well as going into April, what we've called out is we have started to return some of these damp leases. You'll start seeing a decline in this particular line item. We also introduced the wide-body NOS that had also now come into, where the cost related to that will come in this particular line item. It's a play of rates started to moderate downwards from a summer to a winter.
Also, the fact that the smaller narrowbody damp leases are now getting returned as our AOG situation improves. At the same time, we've added now the wide-body damp lease on Norse aircraft. That one has already come in, and there are more that will start coming in, but for a different purpose. That's what you'll start experiencing on this particular line item. That's where the moderation will start.
Understood. One last bookkeeping question from my side. I think the capitalized operating lease liability is up by about 10%. That is what we have stated in the PPT. We have inducted about 67 aircraft if I compare it with March 2024. Historically, when this number was slightly lower in terms of aircraft induction, the addition to the operating lease liability number was a bit high.
Just wanted to check, I mean, has there been any change in the capitalization method? I just thought of asking because the share of finance lease is rising. Over here, I mean, the full value of the aircraft basically gets capitalized. Your thoughts on that?
You're right. You've captured it rightly. Earlier, we had all operating leases. What we've been calling out, our number of finance leases continues to grow now. There's an even mix of operating leases as well as finance leases that continue to be added. Like you rightly pointed out, the liability associated with the finance lease is going to be higher than the operating leases because at the end of the lease term, you get the right to own the aircraft. That's what's transpiring and playing out. That's why you'll see an increase on the overall capitalized lease liability line.
The number in the PPT just captured the operating lease number. The finance lease liability captured separately, is what you're saying?
No, no. It's in the same line item. The contribution, I'm saying, the contribution of the finance lease liability is going to be at an accelerated rate than what it used to be with the operating leases. The shift, that is the shift in the mix that has started to happen since last year, has been that our finance lease liability numbers have started to increase. All the new deliveries that are coming in have a higher mix of finance leases also.
Okay. Okay. Thank you. Thanks for the clarification.
Thank you. Ladies and gentlemen, we'll take that as the last question for today. I now hand the conference over to Mr. Pieter Elbers for closing comments. Thank you. And over to you, sir.
Thank you so much. Ladies and gentlemen, thank you so much for joining us in this call today. We have delivered strong full-year 2025 results. Excluding the impact of foreign exchange, we reported the profit after tax of around INR 88.7 billion and welcomed an impressive 118.6 million passengers during this financial year. In recognition of the strong financial performance for this year, we have declared or actually recommended a dividend of INR 10 per share, subject to shareholders' approval. This will be after a period of five years. Also, now IndiGo is part of a select few airlines in the world which have received credit ratings from leading international credit agencies. Ladies and gentlemen, thank you once again for joining. On a personal level, Gaurav, this is the 11th time we do it together.
It is so nice to see how the strategy is turning out to these very positive numbers and developments. Ladies and gentlemen, looking forward to talking to you next quarter. For now, thank you.
Thank you very much. Ladies and gentlemen, on behalf of IndiGo, that concludes this conference. Thank you for joining us. You may now disconnect your line.