IndiGo seeks deferring aircraft lease rental payments by 6 months as suspension of flight services hit financial position

Mumbai: Country’s largest airline IndiGo is working with aircraft lessors for deferring lease rental payments by at least six months, a source said on Tuesday as suspension of flight services is adversely impacting its financial position. IndiGo has 259 planes in its fleet comprising A320s, A320Neos, A321s and ATRs. Airlines are grappling with acute financial woes as commercial services remain suspended in the wake of the nationwide lockdown to curb spreading of coronavirus infections. Against this backdrop, the source said IndiGo is looking to defer payment of aircraft lease rentals to lessors. [caption id=“attachment_5506871” align=“alignleft” width=“380”] Representational image. Reuters[/caption] The Gurugram-based carrier largely finances its aircraft through sale-and-lease back mode. Under this arrangement, an aircraft is sold and then taken back on lease by an airline. Generally, this arrangement helps in reducing maintenance costs related to an aircraft. “IndiGo has been seeking to defer payment of aircraft lease rentals by at least six months. It is working towards this with its lessors,” the source told PTI. When contacted, an airline spokesperson said, “we don’’t comment on speculation”. As per IndiGo’s December quarter earnings presentation, the net outgo towards aircraft and engine rental payments during the three months at Rs 134.30 crore. Lease rentals and maintenance expenses, among others, are part of an airline’’s fixed costs. These costs accumulate irrespective of whether flights are operating or not. At the end of December 2019, IndiGo had a total of 257 planes. On 26 March, aviation consultancy Centre for Asia Pacific Aviation (CAPA) estimated $3-3.6 billion losses for the Indian aviation industry in the first quarter of this fiscal. CAPA’s report came a day after the nationwide lockdown was implemented. The lockdown, which was to initially end on 14 April, has been extended till 3 May. Commercial flight services remain suspended since 25 March and only certain flight operations, including those for ferrying cargo, are allowed.