IndiGo Shares Slips Nearly 3% As Crude Prices Surge And Airbus Delivery Delays Weigh

Shares of InterGlobe Aviation, parent of budget carrier IndiGo, dropped about 3% in early trade on Monday, with rising crude oil costs and worries over delayed aircraft deliveries putting pressure on investor sentiment.
The stock was trading at ₹4,351 on the NSE, down ₹127.50, or 2.85%.

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The decline came after a sharp jump in global crude oil prices following renewed tensions in the Middle East. Investor sentiment weakened after reports that Israel struck military targets in Iran following missile attacks by the Islamic Republic.

Crude Oil Surge Weighs on Airline Stocks

Brent crude rose as much as 4.4% to $97.15 per barrel, while WTI crude briefly crossed $94 per barrel before trimming some gains.

Higher fuel prices are generally considered a negative factor for airlines, as aviation turbine fuel forms a significant part of their operating costs. A sustained rise in crude oil prices can increase expenses for carriers and put pressure on profitability.

The surge in oil prices prompted selling in airline stocks, with IndiGo among the companies affected during Monday's trading session.

Airbus Delivery Delays Add Pressure

The stock also remained under pressure following a Bloomberg report published on June 5 that said Airbus SE is facing delays in delivering A321XLR aircraft to IndiGo.

The airline had been expected to receive nine A321XLR aircraft by the end of 2026. But certain deliveries of aircraft have been delayed by many months, apparently because of supply-chain difficulties related to the ongoing violence in the Middle East.

IndiGo has already received two A321XLR aircraft and is deploying them on international routes, including Athens and Istanbul.

According to the report, the airline is in discussions with Airbus to secure favourable delivery slots as it seeks to manage the impact of the delays on its fleet expansion plans.

Temporary Suspension of International Routes

Adding to concerns, IndiGo recently announced the temporary suspension of services to six international destinations between July and September.

The affected routes are Hong Kong, Shanghai, Krabi, Langkawi, Ho Chi Minh City and Siem Reap. The airline cited softer seasonal demand and a challenging cost environment as reasons for the temporary suspension of operations on these routes.

The announcement adds to near-term worries about capacity deployment and operating circumstances in the airline sector.

Long-Term Expansion Plans Remain Intact

Despite short-term challenges, IndiGo confirmed its expansion objectives for 2030 of 300 billion ASK, 200 million passengers, over 550 aircraft and around 3,000 daily departures. 

The airline predicts single-digit FY27 capacity growth on rationalisation but mid-teens CAGR growth between FY28 and FY30 while retaining its fleet and network expansion strategy. 

The airline has kept its long-term fleet and network expansion plans, while rising fuel costs and aircraft supply delays impacted on the shares in early trade.