The fourth quarter results of Inter globe Aviation (owner of Indigo Airlines) saw a sharp 25% fall in Q4 to Rs.440 crore for March 2017. Even for the full fiscal year 2016-17, the company made a net profit of Rs.1659 crore, a fall of 16.5% from the previous financial year. Intuitively, the main reason appears to be higher oil prices. If you compare the price of Brent crude between March 2016 and March 2017, it is up by nearly 70%. You can argue that higher prices were due to OPEC supply cuts and the Trump effect, but the fact of the matter is that the net profits have actually fallen on a YOY basis.
Let us look at some of the sub-factors and variables that impacted the Indigo numbers in greater detail and how oil played a pivotal role in this lower profit shift...
Looking at their revenues and expenses for fiscal 2016-17