Delay in delivery of Airbus planes hits shares of Indian airline IndiGo
New Delhi
INTERGLOBE Aviation shares fell by the most on record after the operator of India's largest airline said it had been forced to lease used planes while waiting for clarity on when it will receive A320neo jets from Airbus Group.
The airline, IndiGo, is in discussions with Airbus and engine manufacturer Pratt & Whitney, its president Aditya Ghosh said on Thursday. He said IndiGo is leasing as many as 22 used planes to make up for the delay.
Airbus delivered its new plane to Deutsche Lufthansa this month in a quiet ceremony after an engine glitch delayed the fuel-efficient aircraft's handover to customers. Airbus had planned to deliver the first A320neo last month to Qatar Airways, which baulked after last-minute issues were detected in software used by the Pratt & Whitney engines.
IndiGo also was scheduled to take delivery of the aircraft last month, but said Airbus was unable to keep to the schedule because of "industrial reasons".
"Delay in delivery of Airbus A320neo is going to impact the future growth of the airline," Mumbai-based B&K Securities said in a note. "These short-term leased aircraft will impact the expense for the airline in the near term."
IndiGo shares fell by as much as 19 per cent on Friday morning, the most on record since InterGlobe Aviation's initial public offering in November.
Sean Lee, an Airbus spokesman in Singapore, said the company is in discussions with its early customers to finalise their delivery schedule for the A320neo.
InterGlobe Aviation reported on Thursday that profit rose 24 per cent in its fiscal third quarter as IndiGo benefited from lower fuel prices and higher traffic.
Net income for the quarter that ended in December rose to 6.57 billion rupees (S$138.9 million) from 5.32 billion rupees a year ago, the company said.
IndiGo and other Asian airlines are reaping the rewards of the lowest oil prices in about a decade, which helps them cut expenses and offer cheaper tickets. Rising incomes in India are boosting passenger numbers for IndiGo, one of the largest customers for Airbus's single-aisle planes.
"Lower fuel prices enabled us to lower our fares to our customers, further stimulating market demand and increasing the propensity of people to travel," Mr Ghosh said in the statement.
IndiGo's fuel costs for the quarter declined 20 per cent to 11.7 billion rupees, while the number of passengers jumped 28 per cent to 8.33 million. IndiGo had local market share of 36.7 per cent last year. InterGlobe Aviation's stock has jumped 42 per cent since the company raised about 30 billion rupees in its public listing.
In August, the airline firmed up an order to buy as many as 250 A320neo single-aisle jets. The purchase was Airbus's biggest order by number of planes and had a list value of US$26.6 billion. In January 2011, IndiGo agreed to take 180 Airbus planes valued at US$15 billion. Bloomberg
