India’s largest airline, IndiGo, is also one of the most affected airlines by the supply-chain issues related to Pratt & Whitney engines. But it’s remarkable how the airline has managed not just to survive the issue but thrive as well. IndiGo posted its highest-ever quarterly profit recently, thanks to sound business decisions that have allowed it to mitigate the losses due to engine issues.
Around 40 planes grounded
During an analyst call to discuss IndiGo’s performance, its CEO Pieter Elbers said that the number of aircraft affected by the engine supply-chain issues was in the high thirties, adding, “I would actually label it now around 40.”
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That’s a lot of aircraft to be gathering dust and not making money for the airline. This was an issue that came up during the 20th annual general meeting of InterGlobe Aviation, and Elbers addressed the situation regarding aircraft on ground (AOG), saying,
“We are dealing with some AOG situation... AOG is being dealt with a whole range of mitigating measures. These measures were announced at the end of last year and have been effective in order to make sure that we deliver our capacity guidance that we provided to the market and shareholders earlier.”
Strength in numbers
IndiGo’s fleet size is also its biggest strength. Despite several of its planes being parked at airports, it has managed to sustain operations with the remaining active fleet. Per ch-aviation, IndiGo has 327 aircraft, of which 42 are inactive.
The same engine issue ultimately became one of the biggest reasons for Go First’s downfall. But unlike Go First, IndiGo steadily increased its fleet size over the years and was better positioned to absorb the shock. Its decision to wet lease two Boeing 777s has also helped mitigate the situation a little by providing high-density widebody capacity to Turkey, freeing up other narrowbodies.
IndiGo also recently signed a lease agreement for 10 Airbus narrowbody planes with BOC Aviation Limited. All 10 A320neos will be powered by CFM LEAP-1A engines and delivered this year itself, hopefully in time for the busy travel season that starts in October.
Earlier this month, the airline posted its highest quarterly profit yet and has been generating decent revenues in the last few months due to high demand. However, its CFO, Gaurav Negi, has pointed out that even though the consecutive profitable quarters have helped strengthen its balance sheet, IndiGo still needs some time to fully recover from the accumulated losses from COVID.
Increasing network
The loss in capacity caused by the grounding of its planes has also not stopped IndiGo from increasing its network, as evidenced by the recent flight launches and announcements. From flying its inaugural flight to Africa and bringing back the Delhi-Hong Kong service to starting various exclusive domestic routes, the carrier has managed to sustain operations.
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With a market share of 63% and almost a thousand aircraft set to join its fleet in the coming decade, IndiGo has ensured that it remains cushioned from occasional shocks such as the present engine issues.
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Source: Moneycontrol