Its loss in the December quarter was smaller than in the previous two quarters, when the health crisis had brought global air travel to a halt, but the company's revenue halved from a year earlier, signalling that a full recovery was still far away.

India's festive season in October and November saw more air travel, and domestic traffic has now recovered to about 80% of pre-pandemic levels, mitigating some of Interglobe's losses during the quarter.

IndiGo also benefited from lower fuel costs, which plunged nearly 66% year-over-year.

"The low level of international capacity continues to remain a major concern for us and continues to hurt our financials," Chief Executive Officer Ronojoy Dutta said on a conference call with analysts.

IndiGo expects to reach 50% of its pre-pandemic international capacity only by mid-2022, and 100% by end-2022, Dutta said.

"We'd like to hit the seasonally strong first quarter next year with all cylinders running, and at full capacity, at least domestically," he added.

IndiGo said it expects current-quarter average seat kilometers - a measure of passenger-carrying capacity - to be around 75%-80% of the capacity during the same period last year.

The New Delhi-based airline's daily average cash burn had halved to 150 million rupees in the quarter from June-quarter levels, but the improving trend was not expected to continue due to the recent run up in oil prices, IndiGo said.

Interglobe reported a loss of 6.27 billion rupees ($85.9 million) in the three months ended Dec. 31, compared with a profit of 4.9 billion rupees a year earlier. Revenue fell 50.6% to 49.1 billion rupees.

($1 = 73.0359 Indian rupees)

(Reporting by Sachin Ravikumar and Chandini Monnappa in Bengaluru and Aditi Shah in New Delhi; Editing by Maju Samuel)