Evening, ladies and gentlemen, and welcome to InterGlobe's conference call to discuss the second quarter and fiscal year 2026 financial results. My name is Meerav. I'll 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. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note, a reminder for today's conference call is being recorded. I would now like to turn your call over to your moderator, Ms. Richa Chhabra, Investor Relations Team of InterGlobe. Over to you, ma'am.
Good evening, everyone, and thank you for joining us for the second quarter of fiscal year 2026 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, Richa. Good evening, ladies and gentlemen, and thank you so much for joining the call. We have announced our financial results for the second quarter of the financial year 2026 today. For the quarter ended September 2025, we reported a total income of INR 196 billion, which is an increase of over 10% as compared to the same period last year. In terms of profitability, excluding the impact of foreign exchange movements and hedging, we reported a profit of INR 1 billion, or INR 1.04 billion, against a loss of INR 7.5 billion during the same period last year. Including the impact of foreign exchange movements, we reported the loss of around INR 25.8 billion during the quarter. This is the consequence of future dollar obligations and the reverse of the dollar and the rupee trend.
The uncertainties around global policy-related matters led to a significant rupee depreciation during this quarter. Gaurav will delve into greater details on this topic. We have delivered strong operational results driven by disciplined capacity deployment supported by stronger revenue environments and lower fuel prices. With the Indian aviation market growing and also maturing, we see seasonality coming into the picture, and as in any part of the world, we have started to structurally incorporate this seasonality into our planning. In the same direction as we had communicated during our last earnings call, along with some of the capacity cuts due to the Delhi runway closure, we have optimized our capacity allocation during this quarter to ensure the right flights were available in the right markets at the right times. Against this backdrop, we had the privilege to serve 28.8 million passengers during this quarter.
While the first quarter of the financial year was shaped by significant external challenges in terms of geopolitical tensions and airspace restrictions, leading to impact on revenue performance. In the last earnings call, we had mentioned July to witness stabilization and anticipated August and September to witness further recovery, leading to a notable revenue performance improvement when compared to a year-over-year basis. During the quarter, we took deliberate steps on the path of disciplined execution against our long-term strategy. Every pillar of our plan—network expansion, fleet strategy, operational excellence, and customer engagement—moved forward with intent and momentum. Our domestic network continues to be the backbone of InterGlobe's scale and reach across India. Q2 FY 2026, we expanded to 94 destinations, further reinforcing our position as the country's most connected airline. The launch of operations from Hindon Airport in Ghaziabad opened new access points in the Delhi NCR region.
During the quarter, we have also added Jalandhar in Punjab and Purnea in Bihar, strengthening our presence in high-potential regional markets and reinforcing our commitment to connect every corner of our country. We announced mid-October we will be introducing our first Airbus A321XLR in the next few months, which will be offered in two-class cabins having 183 economy and 12 Stretch seats. In the new year, we will start operations to Athens from Delhi and Mumbai through this aircraft. It marks a significant step forward in our growth journey as it extends our operational range from the current 5-6 hours to approximately 7-8 hours, unlocking access to a much broader set of international destinations across Asia and Europe that were previously beyond our reach.
With this extended range, we will be able to deploy nonstop connections to high-demand international markets, reduce dependency on nonstop itineraries, and offer greater comfort, convenience, and choice to our passengers. To complement our fleet expansion and accelerate international connectivity, we have also announced MOU for co-chair partnership with Aegean Airlines in Greece. These alliances extend our reach far beyond our own network, giving customers seamless access to more than 80 destinations worldwide. More importantly, they amplify our brand presence in key international markets and position us as a trusted global player. We have also spearheaded the resumption of flights to China and are operating flights from Kolkata to Guangzhou currently since October 26th. We are super proud to be starting Delhi to Guangzhou in a few days as from November 10th onwards. With this very important step, we are looking at adding more direct flights to China.
India stands at the center of global aviation opportunity. Long-range connectivity is the next frontier, and we are moving decisively to capture it. To position ourselves for this growth, we have doubled our order of Airbus A350 widebodies from 30 to 60, securing the capability to serve new international destinations and connect India to key global markets. During the quarter, we also broke ground on our new state-of-the-art Emerald facility in Bengaluru. Once operational, it will allow us to handle heavy maintenance in-house for our widebodies, cut turnaround times, and reduce reliance on third-party providers to some extent. Just as importantly, it will also create high-quality employment opportunities in aviation engineering and technical services, supporting skill development and job creation in the region.
While we await the delivery of our own widebodies from 2028 onwards, in the interim, to support rising demand and maintain flexibility, we have already added four Boeing 787 widebodies on a damp lease basis and will be adding two more in the coming months. These aircraft are flying to Amsterdam, Manchester, Copenhagen, and London Heathrow. Addition of these destinations is a milestone moment for us, expanding beyond our traditional network and giving customers direct access to markets that were previously out of reach. When we launched our tailored business-class product, Stretch, almost a year ago, it was a bold move to redefine the travel experience of our customers. Today, through our 40+ Airbus A321 dual-class aircraft, Stretch is operational on seven key domestic routes and eight international routes.
We will be adding it to one more international route, Mumbai to Phuket, and one more domestic route, Mumbai to Chennai, later this month. Additionally, the Stretch is also available on our new long-haul destinations, being serviced through damp lease aircraft with a differentiated product offering to suit the requirements of our customers. In terms of our loyalty program, Blue Chip continues to gain strong traction and is fast becoming a key pillar of our customer engagement strategy. In just over a year since its launch, Blue Chip has grown to around 7 million members, reflecting the growing affinity travelers have for the InterGlobe brand. This quarter, we accelerated the program's momentum with the launch of three co-branded credit cards in the partnership with Kotak Mahindra Bank, IDFC First Bank, and SBI Cards.
These offerings are designed to seamlessly integrate travel rewards into our customers' everyday spending, allowing them to earn and redeem points across a growing ecosystem of benefits. As we continue to scale this platform, we see significant headroom to unlock value through personalization, partnerships, and digital innovation. Further, operational performance continues to be a source of strength and consistency for InterGlobe. We have led the industry, especially compared to domestic players, in on-time performance for nine consecutive months now across all major airports, a reflection of meticulous planning, real-time coordination across teams, and relentless focus on execution. This leadership has held firm even as we scaled our fleet, added new destinations, and navigated seasonal disruptions. As we enter the seasonally strong December quarter, our fleet and operational plans have been scaled up to meet the festive and peak travel seasonal demand.
We remain fully committed to delivering a reliable and seamless travel experience through the busiest months of the year. In October itself, we operated more than 2,300 flights daily on several days on our 600+ routes. As we move forward, we continue to add more flights. With these increases in capacity, we estimate early teens capacity growth for the full financial year 2026, which is slightly higher than our earlier communicated early double-digit guidance of capacity growth. In closing, the September quarter enabled positive operational results through well-defined and executed fleet strategy. We delivered ahead of expectations on revenue, + 10%, executed with discipline across all key priorities, and maintained operational leadership in a seasonal market with external weather-related disruptions across India.
Our entry into the long-haul markets, the rapid expansion of our international footprint, and the deepening of our global partnerships all underscore a single fact that we're building our future and the future of Indian aviation with purpose, precision, and pace. With that, let me now hand over the call to Gaurav to discuss the financial performance in more detail. Thank you.
Thank you, Pieter, and good evening, everyone. For the quarter ended September 2025, we reported a total income of INR 196 billion, an increase of more than 10% as compared to the same period last year. Operationally, the business remained resilient, and we reported a profit excluding the impact of the foreign exchange movement and hedging gain of around INR 1 billion, with a profit margin of around 1% in a seasonally weak September quarter. The tariff imposition on India and the continued SBI outflow in the second quarter led to a sharp depreciation of the rupee of around 4% at the quarter end. The impact of this sharp rupee depreciation has weighed down on our reported profitability for the September quarter, as we reported a net loss of INR 25.8 billion against a net loss of INR 9.9 billion during the same period last year.
We reported an Adjusted EBITDA, which is excluding the impact of foreign exchange movement and hedging gains, of INR 38 billion, with a margin of around 20% compared to an Adjusted EBITDA of INR 27 billion and a margin of around 16% during the same period last year. We added capacity in an optimized manner and grew by around 3% in terms of seat deployment and around 8% in terms of ASKs. This resulted in a flattish domestic capacity growth and a growth of more than 26% on the international sectors as compared to the same period last year. In terms of top line, the quarter was marked by revenue performance exceeding our earlier expectations due to stronger-than-anticipated performance in August and September, especially in the domestic market.
The number of passengers served by us during the quarter grew by around 4% on a year-over-year basis, whereas the overall industry remained largely stagnant. As explained in our earlier earnings calls, our exposure to foreign exchange risk is primarily from our lease liability and maintenance obligation denominated in U.S. dollars. While we have some dollar-denominated assets in the form of deposits, the net exposure as of the end of September is approximately $9 billion. This would amount to a foreign exchange loss of around INR 9 billion or INR 900 crore for every rupee depreciation at the quarter end. While these liabilities are long-term in nature and payable over 8-10 years from a cash flow standpoint, however, based on accounting norms, we recognize the currency impact at the end of each reporting period.
With a INR 3.18 depreciation at the September quarter end as compared to the June quarter end, we ended up with around INR 29 billion foreign exchange loss under the foreign exchange line item in the income statement. As we have highlighted earlier, we have been actively taking steps to mitigate these exposures by hedging part of our foreign currency outflow and have around $850 million positioned in the hedge book. We recognize the gain on hedging of around INR 2 billion in this quarter. In the coming years, we will continue to enhance this position. Additionally, as we continue to scale up our international operations and enhance our brand globally, we expect the natural hedge through the dollar inflows from international revenues to increase, which will provide us with further insulation against currency fluctuations forward.
Now, on the revenue side, the passenger unit revenue came in at INR 3.87, which is 3% higher on a year-over-year basis. These came in at INR 4.69, which is around 3% higher as compared to the same period last year. The seat factor grew by around 1%. However, with the increased stage length, our load factors remained flattish at around 83%. On the cost side, the fuel CASK reduced by 16% on a year-over-year basis, largely driven by a reduction in fuel prices and the redelivery of some older generation damp lease aircraft. The CASK ex-fuel ex-forex came in at INR 3.01, which is higher by roughly 4% on a year-over-year basis. The increase in CASK ex-fuel ex-forex was primarily driven by the depreciation of the Indian rupee and had an impact on a dollar-denominated cost base.
We have more than 60% of our total expenses, such as fuel, maintenance, directly or indirectly dollar-denominated. This leads to an inflated cost from a constant currency perspective. Also, the annual contractual increases across the line items and the disciplined capacity deployment leading to a reduction in aircraft utilization, which our fixed cost is being spread over a lower base of ASKs. Based on our current estimates, due to the higher-than-anticipated currency depreciation and the lower-than-anticipated reduction in aircraft on ground and induction of some additional damp leases, we are estimating an early single-digit percentage increase in our unit cost, excluding fuel and foreign exchange, for the full financial year 2026 as compared to the full financial year 2025. Also, note some of these will also have an offset in the revenue line items, largely towards the claims from the OEMs for the AOGs.
Moving on to the balance sheet side, we ended the September quarter with a capitalized operating lease liability of INR 497 billion and a total debt, including the capitalized operating lease liability, of around INR 748 billion. Our right-of-use assets at the quarter-end were around INR 538 billion. Our liquidity has further improved as we ended the September quarter with a free cash of INR 385 billion and a restricted cash of INR 150 billion. Also, on the balance sheet, continues to remain strong, and we continue to maintain a healthy cash balance, which will give us flexibility to support growth while navigating external uncertainties. This strength is allowing us to take a more strategic view on our fleet ownership.
In terms of the fleet, during the quarter, we inducted 15 aircraft from our original order book, 8 on operating leases, and 7 on finance leases through our captive leasing unit in the GIFT City. We also redelivered 11 aircraft from our original order book during the quarter. We also purchased 6 finance leased aircraft whose lease terms had ended at a nominal value. These are now reclassified as owned from finance leased. As of September 30, we had a total of 14 owned aircraft and 62 finance leased aircraft. In totality, we have a fleet of 417 at the end of the September quarter, of which 56 aircraft have been acquired through the GIFT City entity. As communicated earlier, we have historically operated with an operating lease-heavy model. We are now actively transitioning towards a more balanced structure.
By 2030, our goal is to have 30%-40% of our total fleet held on our balance sheet, either in the form of owned or finance leased structure. Aligned with this approach, as Pieter mentioned, we are also deploying INR 1,000 crore of cash over the next three to four years towards building a world-class MRO with 12 bays. MROs for both the narrow bodies and wide bodies in Bengaluru. Moving on to the AOG situation, the number of grounded aircraft remains stable in the range of 40s. Based on the latest guidance as received from the OEM, the number of grounded aircraft is expected to remain range-bound at the current level till the end of the year. Beyond this, we are actively in discussion with the OEM for getting further guidance on the grounded aircraft.
While we remain on track to receive one aircraft per week from our original order book, the grounding situation has not eased as quickly as we had anticipated, and there's a market opportunity at hand. Hence, to ensure we are well-positioned to meet the strong and sustained demand, particularly through the peak travel season, we have taken steps to augment our fleet through additional damp lease arrangements. We have already added two A320s on damp lease basis in September and plan to add more narrow bodies on damp lease in the coming months.
As we move into a seasonally strong second half of the financial year, based on market opportunities and additions of long haul, we are pleased to announce that we will be able to grow our high teens for both the third and the fourth quarter of the current financial year as compared to the same period last year. This will translate to a slightly upward revision to our earlier teens capacity growth for the full financial year 2026 as compared to the earlier guidance of early double-digit growth. On the revenue side, based on the trends of October, we are estimating a flattish to a slight growth in the passenger unit revenue PrASKs for the third quarter as compared to the high base during the same period last year.
In summary, the first quarter saw a series of events, including geopolitical tensions, airport closures, etc., followed by stabilization in July and a strong rebound in August and September. We are gearing up for the second half of the year, which is a seasonally strong period. We are prepared to navigate the evolving landscape with agility and continue to deliver value to our customers, employees, and shareholders. 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 with the question-and-answer session. Anyone who wishes to ask a question may press Star and One on their touchscreen 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. First question is from the line of Krupashankar from Avendus Spark . Please go ahead.
Hi, good evening, and thank you for the opportunity. My first question would be on the capacity addition. While you did mention that there will be high teens capacity addition in the second half of 2026, you're also noting that the competitors are also adding substantial capacities in the sector. Now, taking this into consideration, are you seeing the yields remain robust and any challenges with respect to yields? Also, do you see that with any escalations in cost and that can shape up the yields over the second half?
You're right. We're looking at a significant capacity addition into as we go into Q3. It's going to be in the high teens. Krupaka, just go on mute. There's a background noise coming from your end. Just go on mute. Based on the trends that we've seen in October, there is definitely an increase in the yields. Again, that is also given the fact that Diwali, which was in November last year, has moved into October. We did have a very strong October performance. Like I said in the opening statements also, for Q3, we are at least looking at a flattish prask, if not slightly better. October has been very strong. We are still looking at a flattish to a slightly better performance in terms of prask unit revenue performance, given the fact that last year also was a very strong Q3 performance.
A strong Q3 performance last year, similar performance from a prask we are anticipating this quarter also, Q3, and a significant capacity push, which is in the high teens, is the way we are looking at the quarter.
Got it. Any cost escalations you're expecting, Gaurav?
The cost escalation also I kind of alluded to. One is going to be the FX. We'll have to see because we do have U.S. dollar-denominated expenses. So while we do have the to-market movements, there are underlying costs related to U.S. dollar-denominated expenses, which will naturally move in line with the way the FX is going to move. Having said that, one of the elements that we covered in our opening statement is the AOGs. The AOGs, what we had anticipated, was to taper down. We were in the high 70s in Q1 of last year. We've managed the situation very well to bring it down to mid-40s. We are actively engaged with the OEMs, but at least the guidance right now is that this number will remain in that particular range. So it's going to be range-bound. We had an active discussion.
If the AOG doesn't trend downwards, obviously, there is going to be a cost dimension. There's an element of claims, and we've always said that the claims do not cover the costs. So that's going to be one dimension of the cost that we do foresee. Let's see how that plays out, depending on how the AOG situation plays out. Alternate to that, we are going to be beefing up capacity in the form of damp leases. So we are bringing in more damp leases. Those damp leases, as we had earlier also kind of mentioned, are at a markedly higher cost compared to if they were our own fleet. That was something that had tapered down. We had returned most of our damp leases by the time we were coming into Q2. We'll start scaling up.
So there is going to be a bit of a cost element which is going to start creeping upwards. We've mentioned that also in our opening script, where we are seeing at least early single-digit increases in unit cost structures. But let's see how the yield environment plays out. It's been very strong in October. We anticipate, again, a flattish to a slightly higher yield structure, which will offset some of these costs that I've talked about.
Got it. Capping on the pilot inflationary costs, given the attrition pressures. Which I've seen spoken about on public forum. Anything to talk about that?
The attrition scenario remains stable, but there's a new, and we've spoken about this also in the past, is the FDTL norm that has kicked in from November. Given that the FDTL has now kicked in, there is going to be some element of cost dimension that is going to start playing out. There is going to be an increased cost that we'll have to incur related to the implementation of the FDTL. How that kind of plays out, given the various efforts that we are trying internally within the organization to optimize productivity and to keep the cost low, but we do anticipate there will be a slight uptick in the cost given the new phase two that has been kind of implemented. While it's a scaled-down version from what was initially proposed by the regulators, nonetheless, there will be some incremental cost.
Got it, Gaurav. Thanks for answering. I'll get back in the queue.
Thank you. Next question is from line of Bennett from Morgan Stanley. Please go ahead.
Hi team. Congratulations on a—
Bennett, sorry to interrupt you. Can you speak a little louder please? You're sounding too soft.
Yeah. Hi team. Congratulations on a good quarter. I'll just pick up from the earlier question. Gaurav, you talked about early single-digit increase in CASK ex fuel. Earlier, we were talking about it to be flat. In your opening remarks, you also said there is a counter support in that in the top line also in terms of compensation. When you take both into account at the profitability level, also the picture sort of deteriorates or remains unchanged?
There are various drivers that are hitting the CASK. One is the FX, so there's no offset to that. There is going to be pressure that is going to come in from an FX standpoint, the U.S. dollar-denominated. The piece I was alluding to offset is going to be the AOG. If the number of the AOG doesn't kind of move in what we had anticipated, the cost related to AOG is going to come in the cost side, whereas the claims will come, as we've kind of communicated in the past, on the revenue side, so revenue from other operations. That's going to be the offset that will be there. All elements of cost will not have an offset. It's largely the AOG bit that will have an offset sitting in the revenue side.
Barring that, there is going to be cost related to what I mentioned in terms of FX that is there. Obviously, the damp leases that we are getting in will be an increased cost. There's no offset to that also. There is going to be a marginal increase on the CASK side in the early single digits that I mentioned. Part of it offsets in the revenue, but a large part is still going to be an increased cost. Again, both single digit increases.
Thanks for that. Secondly, when we look at your capacity guidance, on a QOQ basis, this will be one of the sharpest capacity increases that we've seen from InterGlobe in a long time. Could you share a little bit thoughts about how does it go between domestic and international? Last quarter, bulk of the capacity went to international. Secondly, linked to that, typically, we see Q2 is always a build-up quarter. You add a lot of cost ahead of Q3 in terms of staff, in terms of damp leases. Fair to say that some of these costs for this very sharp 16% jump in capacity Q.
Thank you.
Are built into Q2. Yeah.
Bennett, your voice is muffled, so people are hardly able to hear. I do not know. The moderator, you were able to hear, but at least at our end, it was not coming through.
Is this better, Gaurav?
Yeah. Now it's better. Again, please try.
Yeah. So when we look at capacity guidance for Q3, on a QOQ basis, this is one of the biggest increases that we've seen from the company. Could you share the breakup between domestic, international, how you are thinking? Secondly, fair to assume that some of the costs related to this capacity would have been built into Q2 costs also.
Again, the large part of the capacity increase is going to happen, again, disproportionate towards the international. As you're aware that we're scaling to a large extent on the wide-body operations and long-haul operations. We've already announced some of those. Partly got played out in the second quarter with Manchester as well as Amsterdam. Subsequently, we've also opened up Copenhagen and London Heathrow. There's more to coming. Last part of the capacity deployment, both on the wide-body side, even on the narrow-body, is going to be at least on the international. We will continue to kind of grow capacity on the domestic side, subject to, again, the opening of some of these airports that have got deferred out. While we were hopeful that they will open up a little earlier than what we had anticipated, they're kind of moving to the right.
In short, we will deploy capacity where there is an opportunity, and we feel it's the right place to go. A disproportionate increase is going to be towards international.
If I may add there, I think the quarter-over-quarter capacity development is not the most important. If we just take a step back and look to the strategy which we have launched three years ago. We would become from a largely domestic operator into an international, or if you wish, global operator. And since we have been doing that since, we have kind of doubled our international footprint from a little over 20 destinations three years back to 45-ish today. We continue to build on that. The growth is even larger when we look to the number of routes. The number of routes today is exceeding the number of hundreds. We are kind of building on these numbers. We will continue to do that quarter-over-quarter. we have given an earlier guidance of having in the range of 30% of our ASKs in terms of international.
We have achieved that. With the wide bodies coming in, that percentage will grow to 40%. You will continue to see these variations. I think it is good when we speak about Q2 optimized capacity. We see that on the domestic side, we had basically a flattish situation, and basically all the growth was on the international side. Domestic was a mixture of the Delhi airport closure and some capacity reallocation, which we have done. The opportunity, I mean, more strategically rather than quarter-over-quarter comparison, is there is an enormous growth market. With that growth market, InterGlobe continues to grow. I think InterGlobe is very well positioned with the enormous order book we are having. That is one. Two, the international side, where the capacity share of Indian operators was significantly lower than of the foreign operators, we are rapidly catching up.
We see now that on the international side, actually, we are one of the leading airlines rather than a small player in that field going forward. In the near future, the XLR will help us to make a next step. That is arriving in the next quarter. We will go into the operation in Q4 and clearly the further growth of the wide body. Again, quarter-over-quarter, we see these dimensions, but it is part of a holistic and larger strategy where you see the dimension moving into building that network. Our domestic network will remain the backbone of the InterGlobe operation, connecting the nation, having this impressive 94 destinations. I shared earlier, 90% of the Indian population lives within 100 km of an InterGlobe served airport. That in itself, I think, is a very strong statement and a very strong asset we are having.
With that, that international connectivity is building, not only for Indian customers, but increasingly also for foreign customers who choose India as a transfer point for their journeys. We see that, for example, with the flights coming from both Manchester and Amsterdam, connecting in Mumbai to other parts, either domestic or international.
Thanks for that, Pieter. Thanks, team.
Thank you. Next question is from line of Prateek Kumar from Jefferies India. Please go ahead.
Yeah. Good evening. Thanks for the opportunity and congrats for good results. My question is around, you said that you're looking to accelerate international while still your PrASK guidance remains flat to positive year on year. There is a general perception or understanding that international yields are kind of weaker versus domestic. So that PrASK guidance kind of factors your accelerated addition into international guidance?
I think that is, if you look at the yield spread ASK, by definition, the longer that you fly, the lower the yield per ASK is. That, I guess, is an observation. The same would go for the cost per ASK. The further you fly, the lower the cost per ASK is. I think that you cannot just draw the conclusion that flying international is having a lower yield because also you have a lower unit cost. That's one. Second observation here is that given the geographical position of India, we're having the opportunity to expand actually to east, west, north. Now clearly, with China being added, we have a new opportunity of opening new revenue markets. The international network also allows us to participate in markets which have stronger seasonality and stronger variations.
I think some of the things we have been doing is moderate our domestic capacity and reallocate it to international. Also, we could do the other way around. Increasingly, this international footprint allows us to put capacity where at that point in time, market and demand is, and as such, optimize the revenues. Another thing, and perhaps that will come in a later question, but let me preemptively address it. The internationalization helps us also by addressing some of the natural currency hedges we're going to do. More internationalization clearly brings in, again, here in unit revenue, not only unit revenue in rupees, but also in dollars or euros or British pounds. We get all this foreign currency coming in, which clearly helps us to provide a more natural hedge. Again, here, it's a combination of all the different factors as, I would say, holistic ingredients of our strategy.
Thank you. One other question is kind of related. You have now almost one year of launch of FlexSpeed on domestic routes. How is the unit revenue sort of planned out on a blended basis on that segment versus your ongoing economy segment and domestic routes? Or maybe a blended average for companies?
Yeah. We're very pleased, actually, with the way to start. We started indeed almost one year ago in the middle of November of last year. You may recall we started from the route Delhi to Mumbai, and then it took a couple of months before all the planes were there. That's from, I guess, the middle of January of this year that was done. Then we moved to Bengaluru and then moved to Hyderabad. What we see now is that the flights which were launched initially have really picked up steam, and customers are increasingly better aware and knowledgeable of the product and things we're having. It's to some extent also connected, I would say, to our loyalty program because clearly, a certain part of these Stretch customers are those who are flying frequently and those who also sign up for a loyalty program.
We see that the actual loads on those flights with a combination of Stretch and economy class is actually doing very, very well. Again, the ones we introduced at the beginning, like Delhi-Mumbai, have matured. The ones we have introduced more recently, like Delhi-Kolkata, are still in the, I would say, in the growing phase and will take a bit of time to further mature and get the market awareness. Twisted by the positive reaction on the wide body on Bangkok, we've decided to accelerate or prepone some of the international expansion. We started flights into Singapore, Bangkok, and Dubai. With international Stretch, load factors there are actually better even than the domestic one. It's just 12 seats on these highly business routes. Actually, performing, the demand is actually very good. That entices us to look at other opportunities.
We haven't decided it yet, but clearly, we will look to further optimization. I think here, again, the strategic picture is not what was the load factor on a specific route in the last quarter, but as part of our journey in becoming a global aviation player, does this make sense? If we take stock now after one year, it certainly has. We'll optimize a little bit the exact allocation of domestic and international. I think we've done the right thing by putting this only on the nation's busiest and business routes. We may optimize a little bit here and there. We put a toe in the water when it comes to short-range international, Bangkok, Dubai, Singapore. That's resonating very well. For sure, we'll continue to build on that. The overall unit revenue of a plane with and without actually is a better proposition on the planes with.
Thank team and not the board.
Thank you. Next question is from line of Bhavin from Sameeksha Capital . Please go ahead.
Yes. Thank you.
I just wanted to ask. One thing from a cash flow perspective, and I'm only looking at the cash items in the cash flow. What is likely to be the growth or relationship of increase in the lease payments and interest on lease, the items in the financing that reflect the aircraft cost? I mean, how do we think about that in relation to capacity growth or whichever metric we can track because of the change in the aircraft acquisition strategy?
Bhavin, probably this will take a bit more time and we can have a separate discussion. If you look at the cash flow that we published for September, you'll see our CFOA increasing. year-over-year, you'll see the increase in the CFOA. As we continue to grow the business, the cash flow correspondingly is increasing. Through that increased cash flow, obviously, we've been able to manage to pay all our leases as well as any obligation related to the leases. We do have incremental cash that got generated in this quarter. Between June to September, we've added close to INR 4,000 crore of cash on top. We continue to kind of increase our cash generation through the operations and the growth that we have. The cash flow is supposed to keep increasing. Having said that, we now need to put the cash to utilization.
We already have, as I mentioned in my opening remarks, close to INR 38,000 crore of cash that we've accumulated. A large part of that is going to be towards our safety net that we want to ensure we have. Beyond that, we are deploying cash towards, again, what was mentioned, towards investments in MROs that we are coming up with. A large part is going to be going towards infrastructure builds and digitization. The rest is going to be towards financing most of our aircraft, whether it's in the form of taking more finance leases where you have an equity participation or outright purchases. Those are the areas we'll continue to kind of explore. If you need further color around the cash, you can separately have a conversation with the IIT.
I think just one quick one. The wide body. Wet leases, now you're going from four to six. I mean, does it mean that you already have seen enough in terms of evidence of profitability for this particular type of activity?
When we started this wide body expansion, the notion for us was we've ordered the Airbus A350s. However, it will take a couple of years before they will be delivered. That's the nature of the industry we're in. I think I mentioned at that point in time, India is in a hurry and so is InterGlobe. We didn't want to wait for that. We signed up for the six in basically two steps. It's too early to judge. We started on July 1, actually, the flights into Amsterdam and Manchester. The fact that we're expanding on Manchester, that we have expanded on Amsterdam, you can take both of that as a positive sign. Same goes for the first start on Copenhagen and London. It takes a bit of time. We've launched these flights relatively short before departure.
Looking at the performance, we speak a lot on the passenger side, but also on the cargo side. I think it's important to mention that. I think the exit number is 90%+ of all cargo out of India is flying on non-Indian operators. The opportunity for Indian operators to be part of the Make in India story is really helpful. We actually see good loads on the cargo side, both in and outbound. We're very encouraged by the six. I think it's more loads and initial market response than exact numbers, but clearly, we'll move forward. With the start of London, for every airline with global ambitions, flying into Heathrow is a very important milestone.
Thank you very much.
Thank you. Next question is from line of Pulkit Patni from Goldman Sachs. Please go ahead.
Thank you for taking my questions. I've got a couple of them. The first is there are two top processes. One is, okay, let me add capacity because I have the benefit of fleet availability being the largest player, having access to fleet. Let me add fleet and passengers will follow. The second is because you have access to data way better than us, are you seeing the passenger traffic growth also sort of picking up? My question comes because, at least based on what we are tracking, the growth is still sort of subpar relative to what we've seen. I just wanted to get your thought on what's driving this optimistic capacity addition. Is it saying we want to just go and capture market right now and then traffic will follow, or we are actually seeing traffic demand or bookings actually being so strong? That's question number one, sir.
Yeah. But you're not audible. Can you hear us?
I think.
Management, can you hear us?
Yeah. We can hear you.
I think we're.
Could you hear my question?
Media question, please.
Yeah. I think we can hear you.
Oh, you want me to repeat?
Okay. I'll repeat my question. My question is your capacity addition guidance, which is very optimistic. Is it based on some data and foresight? Because when we look at hindsight and the data that we have seen, the traffic trends are not as encouraging. I just wanted to know your thought process on that.
Yeah. So I think that's a part of the question which we got. We started to build our strategy as part of the India growth story. And there's a couple of metrics which is there. One is that what's the GDP growth and how do we see the GDP growth for India going forward, and what's the correlation between GDP growth on the one-hand side and growth of passengers on the other-hand side? That is, I would say, a global metric where in a market which is still growing a lot, there's a certain ratio between GDP growth and passenger growth. And whether that is 1.5 or whether that is 2, there's a growth between, there's a relation between the GDP and market growth. That's one. The second element is India is still largely underserved, looking at the number of planes, looking at the seats per capita.
Looking at the international seats, India is not only the largest population in the world, but also the largest diaspora in the world. So if we take these factors, we actually have next to the GDP metric, we have the population and the young population and the growing middle class. And with that, the seats per capita, which when you compare it to not only mature markets like the U.S. or Europe, but even markets like China or Indonesia, there's still significant growth opportunities going forward. So that's two. So those two drivers are driving our long-term capacity growth and were fueling our decisions which we took to order the 500 planes and to have today world's largest order book in terms of fleet going forward. Naturally, quarter-over-quarter, we see some fluctuations. Let me just refresh the memory.
Q4 of last year with the MahaKoomp was a phenomenal quarter in terms of passenger growth overall. Everyone was like, "Are we going to have this for the next couple of quarters? Are we going to have this growth?" Q1 following Q4 was a quarter with a couple of very sad external events, external sort of when it comes to InterGlobe. We had the PowerGem, then we had the Operation Sindor, and then, of course, we had the tragic AI-171, which dampened the situation in Q1. In Q2, it was a combination of recovery on the one-hand side and the Delhi Airport restrictions on the other-hand side. We take a holistic look on that capacity. We are confirming our capacity guidance for the year based on all these different dynamics.
With the growth in the first half, clearly, we are stepping up our growth efforts in the second half because we believe that in the long run, this capacity will be needed to fuel this. Whether that is exactly the same demand for Q3 and Q4, we are confident that these markets will be there and both the combination of domestic and international. Going back to the GDP and the overall projections, then looking at what happened in H1, we see that more as a consequence of some events which happened rather than as a structural change in the market demand. You will see whatever the two new airports are opening in Navi Mumbai and Jewar, you'll get a total different landscape again. We keep an eye on the long-term trends. With that, we're comfortable with the capacity which we have added in Q3 and later on Q4.
Okay. That's very helpful. My second question on this draft paper for cancellation within 48 hours and name change within 48 hours. Any rough sense on what kind of impact it could have if it's implemented? I know it's early, but if you could just help us understand this.
No, we need to see what exactly it means. And we should also, I guess, draw some lessons on what happened on a global basis. I think the airline industry is running it. Sorry, could you keep. A lot of noise. We keep seeing Q2 is, I think, we have done operationally well, but clearly, the market and looking at the overall market, these are quite challenging sort of performances here and there. We should make sure that we find a good balance in that. We will be looking at what does this exactly mean, what are the exact consequences of it. Clearly, if we have kind of free cancellations in such timeframe, there's going to be some consequence to that. That will share and not per se for us only. It's going to be for everyone.
With that, we should look at how do we build up a sustainable aviation ecosystem in the country. I think that is a very important part. It's perhaps a bit premature to precisely react on that, but more generically, I think all policies and efforts should strike a right balance between what's good for the customer and how to, at the same time, maintain our vision and our strategy to build up an aviation ecosystem in India which can stand the test of time and which can continue to deliver on its growth promise.
Thank you so much for your answers, Pieter.
Thank you. Next question is from line of Aditya Mongia from Kotak Securities. Please go ahead.
Thank you for the opportunity and congratulations on a very strong set of results. I'll go ahead with my first question. This one is on the Blue Chip program where the company has made multiple strides. You're at today's 7 million kind of count. When do you start seeing the real monetization happening from a Blue Chip perspective? What kind of.
Your voice is breaking.
Sure. Is it any better right now? I'm joining to listen again.
No, it's still breaking.
Let me join you again.
You're not in the reception area?
Yeah. Let me join back in a bit. That'll be better. Sure.
Okay. Thank you. Next question is from line of Jinesh Joshi from PL Capital. Please go ahead.
Yeah. Thanks for the opportunity. I just wanted to check with respect to the MRO remarks that he made in the opening statement. I mean, currently, are we fully outsourcing the MRO work? I mean, with this new captive unit that is expected to come up in Bengaluru, what kind of savings can we expect?
Sorry, I could not hear the question properly. I do not want to guess what is the answer.
Am I audible now?
Yeah. Are you audible?
Yeah. I just wanted to check on the remarks that were made on MRO in the opening statement. I just wanted to know whether currently are we fully outsourcing our MRO work? With this new captive unit that is expected to come up in Bengaluru, what kind of savings can we expect?
In summary, large part, I would say 90%-95% of our activities are outsourced, meaning we send it to third-party MROs, whether domestic or international. A large part was going to international. Some is going to domestic also because we've got three domestic MROs also. If I got your question right, the captive MRO that we are building is going to come up in the next three to four years. That is what the timeframe that we are looking at. It is going to offset some of these. Aircraft and the aircraft that we are sending outside to third-party MROs to be then serviced within the captive MRO which we are building within InterGlobe.
I think it's an enormous strategic opportunity for us. What we see in other parts of the world, there's a shortage of labor, there's a shortage of parts, and there's a shortage of pretty much everything. That is driving up lead times, it's driving up cost, and it is sort of not helping us in the operational performance. By bringing this work into India, we serve a lot of different objectives at the very same time. First of all, it will help us to reduce the cost by bringing it into India with a lower cost basis. Secondly, we're building up capabilities in a country and company where we don't have a shortage of skilled people. On the contrary, we have a lot of very well-skilled and very well-trained and capable workers when it comes to this part.
Three, we're building up an Indian aviation ecosystem which will allow us to also be better when it comes to seasonality, when it comes to developing certain repair capabilities. That, in the long run, should give us not only cost advantage but even an operational advantage. I think it's a very strategic step for us. It will take a few years before it's fully operational. Given the growth we're having and given the objective to double by the end of the decade, by that time, we should have 600+ aircraft in operation, slightly more even.
On that number, to have our own large MRO facilities, I think, is not only a great opportunity, but it is a necessity when it comes to delivering and continuing to keep our cost leadership, to continue to be a leader in terms of utilization, and continue to develop capabilities in India itself rather than bringing everything outside the geographical shores of India.
Sure. Sure. One last question from my side. I think we also mentioned in the opening remarks that for every rupee depreciation, the MTM FX impact is approximately INR 9 billion. I guess in the past, this number was slightly lower at about INR 7 billion-INR 8 billion. I do understand that if more aircraft get added, the FX liability will increase, and consequently, the loss impact will also be there if the rupee depreciates. If I look at TTF FY 2025, wherein we saw a material FX loss come through because of rupee depreciation, our aircraft count in that quarter was 436, and currently, we are slightly lower than that number. Our MTM impact has widened. If you can just please clarify on this part.
What you saw in the earlier period, and you're trying to translate this in terms of number of aircraft, the mix of the aircraft has also changed. The mix has gone from operating lease liabilities to finance lease liabilities. The finance lease liabilities per aircraft is going to be higher than what you'll have for an operating lease liability. As a result, you'll not be able to correlate this on a number of aircraft basis, but you'll have to look at the mix also. The finance lease liability is higher than the operating lease liability. The mark-to-market has increased.
Understood. Thank you so much, sir. Thank you.
Thank you. Ladies and gentlemen, that would be our last question for today. I would now like to hand the conference to Mr. Pieter Elbers for closing comments.
Thank you so much. Ladies and gentlemen, thank you so much for joining us in this call. We are actually happy that we have delivered a solid 10% growth in top-line revenues and turned into an operational profit of INR 104 crore compared to an operational loss last year, as Indians without the currency impact. As India's aviation sector continues to grow and mature, we understand how critical it is to structurally align capacity during seasonally weaker periods to maintain profitability. Beyond the financials, this quarter was also strong operationally. InterGlobe continues to lead the on-time performance chart, and we have seen great customer appreciation, and we have expanded our network meaningfully. Now, while this year started with some significant external challenges across the industry, we saw a single stabilize in July and recovery through August and September.
Looking ahead, we have scaled up our operational plans for the second half to meet the robust demand and keep driving growth. With that momentum, we have nudged up our capacity guidance for the full financial year 2026. We are now expecting growth in the early teens. Ladies and gentlemen, once again, thank you for joining. I am looking forward to talking to you next quarter. For now, thank you.
Thank you very much. On behalf of InterGlobe, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.