Biggest Airbus A320neo Buyer IndiGo Considers Slowing Deliveries
By Anurag Kotoky, Bloomberg News | Aug. 02, 2016
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IndiGo, the biggest customer for Airbus Group SE's A320neo jets, is considering slowing deliveries of the single-aisle aircraft to give supplier Pratt & Whitney more time to make improvements to the model's engines.
The Indian carrier may seek the delivery slowdown "to allow Pratt & Whitney to catch up on the production of upgraded engines," InterGlobe Aviation Ltd., which operates the airline, said Monday in its fiscal first-quarter financial statement, without providing details.
IndiGo's A320neo order at Airbus totals 430 planes, with the first aircraft handed over last March. The carrier, which has a contract with Pratt to provide power systems for the first 150 planes, said earlier this year it would consider switching to rival CFM International Inc.'s engines for later orders. IndiGo President Aditya Ghosh declined to say whether the airline would shift to the CFM models for the first batch of aircraft.
"The A320neo operations continue to be a challenge," Ghosh said on a conference call with analysts. "We are struggling with maintaining our schedule integrity and our technical dispatch reliabilities at the same level" as the plane's predecessor model, the A320ceo.
Even so, IndiGo is sticking to a target of operating 24 A320neos by the end of March 2017. It currently flies five of the planes.
Stock Falls
Airbus fell 0.7 percent to EUR52.25 at the close Monday in Paris. The stock has dropped 16 percent this year, valuing the Toulouse, France-based manufacturer at EUR40.4 billion (US$45.1 billion). Shares of Pratt parent United Technologies Corp. fell 0.9 percent to US$106.73 as of 12:02 p.m. Monday in New York. IndiGo released its earnings statement after the Mumbai market closed.
Stefan Schaffrath, an Airbus spokesman, declined to comment, saying IndiGo is still taking deliveries of the planes. Sara Banda, a spokeswoman at Pratt, referred requests for comment to Airbus.
The A320neo model, which first went into service with Deutsche Lufthansa AG in January, has been held up due to engine faults. The power plant built by Pratt & Whitney requires a delay to start up so it can reach the right operating temperature. Airbus and the engine maker have said they've devised a fix and are working on an upgrade.
IndiGo also said Monday that net income for the three months ended in June fell 7.4 percent to 5.9 billion rupees (US$88.6 million), hurt by low fares in a fiercely competitive market. India, where passenger numbers climbed 20 percent last year, offers growth opportunity to carriers with an emerging middle class flying for the first time, but base fares as low as 2 cents have been eroding their margins. State taxes of as much as 30 percent also make jet fuel the costliest in Asia.
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