MUMBAI: IndiGo, the country’s biggest carrier by market share, Monday said it will get the first of its ordered Airbus A320 neo (Neo Engine Option) aircraft next month, ending a two-month long uncertainty that had its investors worried and its share price down. The airline however said its net profit for the ongoing quarter will be hit because of the falling rupee.
The airline said “Airbus has confirmed that beginning with March 2016, it will deliver 24 ..A320neo aircraft by March of 2017,”. The original plan was for Airbus to deliver 26 A320neos.
ET had on February 14 reported IndiGo would start getting its planes by April. The airline has a total of 430 of the planes on order from the European plane maker.
IndiGo’s investors have been worrying about a delay in deliveries in the aircraft due to a glitch in the Pratt & Whitney engines. Airbus had warned of the delay first in December, around the time IndiGo was scheduled to get its first Neo plane.
“The new A320neo powered by Pratt and Whitney’s fuel efficient geared turbo fan engines will enable us to structurally reduce our costs as fuel continues to be the single largest element of our cost structure..” said the airline’s president Aditya Ghosh.
IndiGo has also entered into leases for 7 more used A320 aircraft which will be inducted between March and November of 2016.
Overall, on a year-over-year basis, the airline expects to grow its fleet by 13 aircraft in the fourth quarter of fiscal 2016, followed by year-over-year increases of 11 aircraft in the first quarter, 21 aircraft in the second quarter, 27 aircraft in the third quarter and 24 aircraft in the fourth quarter of fiscal year 2017.
IndiGo said that in the fourth quarter of fiscal year 2016, while year-over-year capacity is expected to grow by about 19%, EBITDAR (earnings before interest,taxes, depreciation, amortisation and lease rentals) margins are expected to be at around 35% to 37% and at last year’s levels.
However, for the fourth quarter, year-over-year revenue is expected to increase by 6% to 8% and net profit will also be impacted due to the exchange rate movement in the Rupee versus the US Dollar. In its guidance, it didn’t specify absolute numbers, percentage growth or fall in profit.