Indigo Airlines becomes the Third Largest Airline in the World

Indigo Airlines becomes the Third Largest Airline in the World

Indigo Airlines has become the third largest airline in the world in terms of market capitalization. The low-cost Indian airline has been growing at a fast pace and reaching new milestones. The management has taken bold decisions in the last few years, including placing one of the biggest orders for airplanes. Shares of Interglobe Aviation have experienced a notable surge, exceeding 50% growth over the past six months. With a market capitalization approaching $17.6 billion, the company now ranks as the third-largest airline globally by market value, trailing only Delta Air Lines and Ryanair Holdings.

Delta Air Lines leads the pack with a market capitalization of approximately $30.4 billion, while Ryanair Holdings follows closely with $26.5 billion. Southwest Airlines, according to Bloomberg data, commands a market capitalization of $17.3 billion.

However, it's noteworthy that Delta Air Lines operates across two distinct segments: airline and refinery. While the airline segment contributes over 80% to Delta’s revenue, the remaining 20% is derived from its refinery operations, which supply jet fuel to the airline.

IndiGo has made significant strides in the global market capitalization rankings over the past year. From holding the 14th position among global airlines in March last year, it surpassed United Airlines by December and surpassed Air China and Singapore Airlines in January and February 2024, respectively.

Market sentiment turned bullish following IndiGo's announcement of 'early double-digit' growth in passenger volumes and capacity for FY25, significantly enhancing the stock's prospects. Morgan Stanley, maintaining an overweight rating on the stock with a 12-month target price of ₹4145, cited the company's FY25 growth guidance as exceeding expectations, with Q4 yields outperforming earlier guidance of flat year-on-year.

Encouraging yield trends have prompted many analysts to adopt a positive stance on the stock. Jefferies, upgrading the stock to "hold" from "underperform," raised its yield estimate to 2% and its earnings before interest, taxes, depreciation, and amortization (EBITDA) estimate to 14% to 16%.

IndiGo's shares surged to a record high of ₹3796 on the NSE during Wednesday's trading session, marking a significant uptrend. While IndiGo's stock has rallied by as much as 28% year-to-date, Southwest Airlines has only seen a marginal 1% increase. Meanwhile, the benchmark Nifty50 index has gained close to 5% during the same period.

Celebrating its 17th anniversary this year, IndiGo has emerged as one of the fastest-growing airlines, achieving the milestone of 100 million passengers. In CY 2022, the airline welcomed 78 million passengers on board, slightly exceeding pre-COVID-19 levels. Moreover, IndiGo has expanded its network by adding over 20 new international routes in the last six months while enhancing domestic connectivity. Looking ahead, the airline aims to further expand its network to destinations like Bali, Indonesia, and Medina, Saudi Arabia, in a financially and environmentally sustainable manner, reinforcing its commitment to meeting customer mobility needs and supporting India's progress.