India’s IndiGo to lease new aircraft to weather Pratt engine issues

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Bengaluru (Reuters) –India’s biggest airline IndiGo said on Friday it would lease new planes and extend agreements on some older ones to offset the disruption from new problems with Pratt & Whitney engines.

Pratt & Whitney parent RTX (RTX.N) said in July a rare powder metal defect could lead to the cracking of some engine components in the twin-engined Airbus A320neo, and called for accelerated inspections.

The checks are expected to lead to groundings of hundreds of Airbus (AIR.PA) jets between 2023 and 2026, prompting IndiGo to take early steps to sustain its growth in India’s booming aviation market.

“Looking ahead, demand remains robust. However we have been informed of aircraft grounding … there’s a mitigation plan under execution and we are confident of meeting our financial year 2024 capacity guidance,” Pieter Elbers, IndiGo’s chief executive officer, said in a post-earnings call.

IndiGo has retained 14 of its older Airbus A320ceo, extended leases on 36 other aircraft, and is taking 11 additional aircraft on lease starting November. It is also leasing 12 more A320ceos from the secondary market starting January, IndiGo’s Chief Financial Officer Gaurav Negi said on the same call.

With this, the airline is on track to meet its guidance to expand its current capacity of 334 planes by “north of the mid-teens” this fiscal year and to double in size by 2030, Negi said.

The company is in talks with Pratt & Whitney for compensation over engine issues and expected payments to be staggered, he said.

Close to 40 IndiGo planes are currently grounded due to older issues with Pratt & Whitney engines and the airline is yet to ascertain the number of groundings from the new problems.

IndiGo, which is one of the largest customers for the A320 family of planes, said it expected higher leasing costs to be offset by strong demand for air travel and an overall reduction in air capacity in India following bankruptcy of rival Go First.

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