IndiGo quarterly profit drops as demand slows, fuel costs surge

India’s largest airline IndiGo posted a 12% drop in its quarterly profit weighed down by slowing demand as well as surging engine-related and fuel costs. Analysts were expecting a steeper drop. Gurugram-based Interglobe Aviation Ltd.’s net income fell to 27.3b rupees ($326m) in the three months ended June 30, compared with a record 30.9b rupees a year earlier, IndiGo said in a statement Friday. While this is airline’s first profit decline in seven quarters, the profit still exceeded the average analyst estimate of 25.03b rupees based on data compiled by Bloomberg. Revenue rose 17% to 195.71b rupees from a year earlier, beating estimates. Total costs climbed 24% to 174.45b rupees and fuel costs increased 23%, while airfares for the airline remained flat amid weaker demand. Its passenger load factor fell to 86.7% from 88.6% in the same quarter last year. The carrier had benefited from insolvent Go Airlines India Ltd.’s grounding last year, which had bolstered its airfares and load factor. IndiGo sees capacity for the quarter ending Sept. 30 increasing by “high single digits” compared to a year ago, it said in a post-earnings release. The profit drop comes in a period of increased change for India’s airline industry. Air India, IndiGo’s biggest competitor, is in the middle of an ambitious merger with Tata and Singapore Airlines Ltd.-owned Vistara, to create an entity rivaling IndiGo.<br/>