Thursday, June 18, 2020

Only IndiGo may have this 'flexibility' among its Indian peers, but is the time right?

IndiGo's plan to put some of its owned aircraft in the market to raise funds underlines the unique position India's largest airline has in the industry.
The airline has 29 owned aircraft, which include ATRs and A320s. Rest of its peers in the domestic industry have a fleet that is mostly based on sale and lease back model. Few own the aircraft they operate.

"The bottom line is, no other private airline seems to have this flexibility,"  says Nitin Sarin, Managing Partner of Sarin & Co, which specialises in aviation law. National carrier Air India, adds Sarin, does own some of its aircraft.

At the same time, IndiGo may find itself in a market that is distressed, and has many more airlines trying to do the same - sell and lease back, or sub-lease, their planes.

“The catch is that the level of financial benefit from a sale and lease back is directly correlated to the sales price the airlines can obtain for the aircraft," Helen Spro, an aviation finance analyst at Germany's Scope Ratings told Airport Technology in this article.

Industry pundits though back IndiGo to pull it off, given its 'excellent rapport' with leasing companies. "It also has a good track record when it comes to maintenance of its fleet," says Mark Martin, the founder of aviation advisory firm Martin Consulting.
18/06/20 Prince Mathews Thomas/

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