Wednesday, February 06, 2019

To conserve cash, IndiGo goes back to sale and leaseback model

India's largest airline IndiGo, operated by Interglobe Aviation, has gone back to the sale and lease model, at least for now, instead of buying aircraft, as it looks to conserve cash in trying circumstances.

Till 2017, the airline had championed the sale and leaseback model. But that year, it switched to buying aircraft and owning them to bring down ownership cost and counter rising lease rentals.

However, in an indication of squeezed margins, the airline has been forced to go back to the old model. Chief Financial Officer Rohit Philip said IndiGo has used the sale and leaseback model for the recent two additions in its fleet of ATR aircraft.

The airline now has a fleet of 14 ATRs. Of these, the first 12 were bought as cash purchases.

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"During the periods of uncertainty, it is always prudent for airlines to manage cash carefully. So we decided to finance the next tranche of five airplane through an operating lease, and then we make a case-by-case basis beyond that," said Philip. He said the airline will be using the sale and leaseback model for the next three ATRs too.
06/02/19 Prince Mathews Thomas/