Monday, June 15, 2020

IndiGo to raise Rs 3,000-Rs 5,000 crore by leasing out aircraft, engines

IndiGo can raise Rs 3,000-Rs 5,000 crore by leasing its owned assets including aircraft and engines, Chief Executive Officer Rono Dutta told CNBC-TV18 in an exclusive interview.

"We own some aircraft, some ATRs, a lot of engines, some A320s. We are putting them back on lease. That will give us Rs 3,000-5000 crore of funding. I am quite optimistic about prospects od IndiGo," Dutta said.

The airline believes that the biggest opportunity to save costs lies in the fleet and hence has planned to focus on the efficiency of aircraft in use, lowering maintenance costs and is renegotiating contracts with suppliers for lower costs.

"Our relationship with lessors is a key success factor. We are working with lessors. We are paying all our bills. We are trying to reach an amicable solution with lessors. We are negotiating terms of new planes with lessors," Dutta added.
It is important to note that Dutta revealed that IndiGo will take delivery of around 120 fuel-efficient neo aircraft over the next 2 years and will simultaneously retire nearly 120 A320ceos.

"We have lots of new planes coming. The terms of new planes are for discussion...(in case of) the old planes, we have obligations and we are meeting them. We are returning 120 old planes, getting 120 or so new planes coming over 2 years. Those are under discussion," Dutta said.

This means that the capacity is expected to remain stable for the next two years at India's largest airline, IndiGo, and indicates a more cautious approach at the market amid COVID-19 pandemic.

It is also important to remember here that the airline has decided to cut employees' expenses by 25 percent. In that regard, it has already implemented salary cuts in the range of 5-25 percent in March, and leave without pay program was also announced in May.

"Right-sizing means don't grow too much but make the fleet more efficient. Our focus on employees is very sharp.  The environment is hostile, we are doing 30 percent of capacity, demand is not there...we want to keep our focus on cost because if we don't do the necessary cost-cutting, the whole company will go down. We are taking baby steps at this time, we don't want to take big bold plunges into this," Dutta explained.
15/06/20 Anu Sharma/CNBC TV18

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