Hit by commercial flight suspensions, India’s largest airline IndiGo wants to defer lease rental payments by at least six months. Talks are currently underway with aircraft lessors to make this a reality. IndiGo has 259 planes in its fleet, including A320s, A320neos, A321s, and ATRs, all of which have been grounded since 25th March due to the coronavirus pandemic.
As the lockdown in India continues, IndiGo’s financial position is being negatively impacted by the suspension of flights. The Gurugram-based carrier finances its aircraft through a sale-and-lease-back model. In this model, aircraft are sold and taken back on lease by the airline, reducing maintenance costs. These lease rentals are a part of an airline’s fixed costs, which accumulate irrespective of whether flights are operating or not.
“Indigo has been seeking to defer payment of aircraft-lease rentals by at least six months. It is working towards this with its lessors,” an unnamed source told the Press Trust of India. To date, the airline has refused to comment.
As well as trying to defer lease payments, Asia Times reported that IndiGo CEO, Ronojoy Dutta, announced a number of pay cuts for employees during April. From April 2020, it was reported that Dutta would take a 25% pay cut while executives above the senior vice president level would take reductions of 20%. Other staff were notified they would receive a cut varying from 5 – 15%.
30/04/20 Lindy Whitehouse/Simple Flying
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As the lockdown in India continues, IndiGo’s financial position is being negatively impacted by the suspension of flights. The Gurugram-based carrier finances its aircraft through a sale-and-lease-back model. In this model, aircraft are sold and taken back on lease by the airline, reducing maintenance costs. These lease rentals are a part of an airline’s fixed costs, which accumulate irrespective of whether flights are operating or not.
“Indigo has been seeking to defer payment of aircraft-lease rentals by at least six months. It is working towards this with its lessors,” an unnamed source told the Press Trust of India. To date, the airline has refused to comment.
As well as trying to defer lease payments, Asia Times reported that IndiGo CEO, Ronojoy Dutta, announced a number of pay cuts for employees during April. From April 2020, it was reported that Dutta would take a 25% pay cut while executives above the senior vice president level would take reductions of 20%. Other staff were notified they would receive a cut varying from 5 – 15%.
30/04/20 Lindy Whitehouse/Simple Flying
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