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Bloomberg
IndiGo, the biggest customer for Airbus Group SE’s A320neo jets, is considering slowing deliveries of the single-aisle aircraft to give supplier Pratt & Whitney more time to make improvements to the model’s engines. Shares fell in Mumbai.
The Indian carrier may seek the delivery slowdown “to allow Pratt & Whitney to catch up on the production of upgraded engines,†InterGlobe Aviation Ltd., which operates the airline, said Monday in its fiscal first-quarter financial statement, without providing details. It said net income declined 7.4 percent last quarter amid low fares in a fiercely competitive market.
IndiGo’s A320neo order at Airbus totals 430 planes, with the first aircraft handed over last March. The carrier, which has a contract with Pratt to provide power systems for the first 150 planes, said earlier this year it would consider switching to rival CFM International Inc.’s engines for later orders. IndiGo President Aditya Ghosh declined to say whether the airline would shift to the CFM models for the first batch of aircraft.
“The A320neo operations continue to be a challenge,†Ghosh said on a conference call with analysts.
“We are struggling with maintaining our schedule integrity and our technical dispatch reliabilities at the same level†as the plane’s predecessor model, the A320ceo.
Even so, IndiGo is sticking to a target of operating 24 A320neos by the end of March 2017. It currently flies five of the planes.
STOCK FALLS
IndiGo declined 5 percent to 923.30 rupees as of 9:45 a.m. Tuesday in Mumbai, set for the biggest loss since March 9. The shares have slumped 25 percent this year, compared with a 7.7 percent gain in the benchmark S&P BSE Sensex. IndiGo released its earnings statement after trading hours on Monday.
The carrier said Monday that net income for the three months ended in June fell to 5.9 billion rupees ($88.4 million). India, where passenger numbers climbed 20 percent last year, offers growth opportunity to carriers with an emerging middle class flying for the first time, but base fares as low as 2 cents have been eroding their margins. State taxes of as much as 30 percent also make jet fuel the costliest in Asia.