Monday, May 27, 2024

Airlines in distress? Well, IndiGo is sparing $10 billion for new buys





IndiGo, India’s largest private airlines, is holding talks with Pratt & Whitney and CFM International, two rival firms, for the supply of jet engines. It is being said that these engines could power 150 new Airbus SE A320neo jets which it plans to include in the fleet.

The pandemic has hit the air travel sector very hard with hundreds of flights grounded worldwide. The profits of many airlines have been wiped out altogether and many have gone bankrupt.

Thinking behind talks with rival jet engine makers could help IndiGo get very good deals. However, no comments are in public domain from either IndiGo, Pratt & Whitney or CFM so far.

Incidentally, IndiGo is presently ranked as the biggest customer for jets in the A320neo family. The airline has not decided yet as to which engines would power 300 of its new aircraft.

The last engine order from IndiGo for CFM was worth $20 billion and the new order could be in the range of over $10 billion. Experts say that one reason for the success of the airline is its operating mostly one type of aircraft only. Presently, the airline is perhaps the best known for its OTP (on time performance) in the Indian skies.

Substantial reduction in international travel during the past many months has been unnerving most airlines. A company looking for future aircraft and engines is a surprise for most observers. It also indicates that the company is able meet its cash demands and still has enough reserves to service its debts.

IndiGo had earlier relied on Pratt, owned by Raytheon Technologies Corp, for supply of engines for its aircraft. However, it had moved to rival CFM last year for the supply of engines worth $20 billion. By negotiating with both firms, IndiGo may get a very good price for the engines it buys now.

 


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