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IndiGo plans to induct 50 wide bodied Aircraft

Posted : 24 November 2017 04:32:52 | By TWO Bureau | Two Bureau

IndiGo plans to induct 50 wide bodied Aircraft

According to a report by Anirban Chowdhury in The Economic Times, IndiGo, which has shown interest in buying Air India’s international operations, is actively considering alternate plans to induct at least 50 wide- bodied planes for starting overseas flights, said two people close to the development, as the divestment of the state-run carrier may take a while. “Right now, it’s an optimistic 50-50, but the processes are slow. The airline will wait for four-five months and then implement Plan B of inducting its own fleet of wide-bodied planes,” said a person aware of the matter. A second person confirmed initial discussions are on with Airbus. IndiGo currently has a fleet of 143 Airbus A320 and A320neo planes and an order for over 400 more. Both persons cited above confirmed that the order for wide-bodied planes would be over and above this. The carrier has the option of ordering the 250-plus-seater Airbus A330-800neo, which has a list price of $255 million (INR 1,658 crore). 
The airline would likely get deliveries of this from 2019, said the second person cited above. Another option is the 270-seater A350-800 priced at $275 million (INR 1,787 crore), which would be delivered after 2021. No decision has been made yet, both people said. The airline has in the past said it will shift to the outright purchase of planes from the sale and leaseback (SLB) model as the former is more cost-effective. An SLB transaction, a popular way of financing aircraft profitably, involves an airline selling a plane to a lessor at a premium to the purchase price. It then leases the plane back for monthly rentals. IndiGo had in July publicly expressed its interest in investing in Air India's international operating arm, surprising experts on several counts. This would mean a shift in its one aircraft- type, low-cost domestic airline model. To be sure, the carrier has acquired smaller ATRs to offer regional connections. A ministerial panel had given its nod for Air India’s divestment on June 28. In a conference call with analysts, IndiGo’s co-promoter Rakesh Gangwal had said IndiGo was well placed to ferry long haul international passengers in a low-cost model, fed by its vast domestic network. The proposed investment in Air India was a means to that end. Gangwal clarified that “irrespective of how the Air India story plays out,” it made “fundamental economic sense for IndiGo to enter the long-haul, international market”. 
The government has appointed SBI Capital Markets to handhold Air India through the process. It has also set up five teams of top officials on finance, human resources, properties, procedural matters, formalising the main company's relationship with its subsidiaries, bilateral agreements, flight slots, commercial arrangements and other aspects that need to be sorted out before the sale. This process could take months. SBI Caps is also helping to prepare a business plan to hive off Air India's subsidiaries such as its ground-handling arm. On top of that, officials have hinted the government wants to sell Air India's domestic and international operations under one entity, something that IndiGo may not be looking to invest in, given its own established local network. 
If IndiGo orders the A330neo, it will be hoping that problems with the new Pratt & Whitney Geared Turbo Fan (GTF) engine will be resolved by the time deliveries commence. IndiGo has faced entry-into-service issues with the engine on its A320neos, leading to up to 11aircraft on the ground at one point. The person cited above said the airline had received in excess of Rs 100 crore from Pratt & Whitney as compensation for the issues and the impact they had on operations. The airline has upgraded to the A321 from the A320 for 20 planes to be delivered starting October next year. That’s the biggest and longest-range model in the A320 family.

Tags : #IndiGo, # plans, # induct, # 50, # wid, # bodied,

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