 "IndiGo likely to set up aircraft leasing unit at Gujarat's GIFT City")
IndiGo’s board on Monday gave its nod to set up an aircraft leasing unit in Gujarat’s GIFT City with an investment of Rs 30 crore over the next three years.
The airline also said it will give corporate guarantees of up to $996 million to secure the payment obligations of this leasing unit.
Last month, Air India had set up its aircraft leasing unit in GIFT City.
IndiGo’s board also approved an order for 10 more A320neo family planes with European aircraft manufacturer Airbus, by amending the 2019 order.
In 2019, the airline placed an order for 300 A320neo family aircraft and they are scheduled for delivery by 2030. The board’s decision on Monday raises the 2019 order size to 310 A320neo family planes.
The Tata group-run Air India had in February placed an order for 470 aircraft — 250 with Airbus and 220 with Boeing.
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The central government is developing GIFT City as a global financial services hub.
IndiGo currently operates about 323 aircraft and has previous orders totalling 470 aircraft. These are supposed to be delivered by the end of this decade. The board’s decision on Monday means that India’s largest airline will receive about 480 planes by 2030-end.
IndiGo had in June placed an order for 500 A320 family planes — making it the world’s largest single tranche aircraft order — with Airbus. However, the delivery of these 500 planes will begin in 2030 and end by 2035.
IndiGo posted its highest ever quarterly consolidated net profit at Rs 3,090.6 crore for the first quarter of 2023-24 (FY24). It was on the back of high load factors, lower fuel costs, and better foreign exchange rates. In Q1 of last financial year, IndiGo incurred a consolidated net loss of Rs 1,064.2 crore.
The airline is planning to use a portion of its fresh cash balance —which stood at Rs 15,691 crore at the end of Q1FY24 — to acquire a few aircraft and related assets, such as engines, said its chief financial officer (CFO) Gaurav Negi during a call with analysts.
The airline used to own a few planes before Covid, but these assets were offloaded during the downturn then. Now, it is allocating capital again to own a certain number of planes.
“Further, subject to regulatory approvals, we are also planning to launch our venture capital arm to invest in early-stage companies operating in aviation and consumer-focused allied sectors. These include travel, lifestyle, hospitality, and transportation. Given our large consumer base and growth plans, we believe that these investments will help us add value to the airline,” Negi noted.