IndiGo has initiated conversations with two lessors to sell and lease back 12 of its ATR 72-600 aircraft and their engines. This, according to sources, is the first step towards raising additional liquidity of approximately ₹2,000 crore about which Ronojoy Dutta, CEO, IndiGo, had spoken about during the earnings call of Q1FY21.
Two people privy to the information said that the conversations with at least two lessors — Aergo Capital and DAE — have been going on for the past few days. According to one of the two people, “Each of these aircraft is likely to generate $18 million to $20 million for the low-cost carrier. The plan is to sell and lease back these 12 aircraft to one lessor only.”
Emails sent to DAE and Aergo Capital did not elicit any response.
Currently, IndiGo has the largest fleet in India. As of June 30, 2020, IndiGo had 274 aircraft in its fleet, up from 235 in the same time last year. Of these, it owns 29aircraft. As of June 30, 2020, IndiGo had 25 ATRs in its fleet, in comparison with 18 ATRs at the same time last year.
IndiGo confirmed that the airline is mulling selling and leasing back these 12 ATRs, along with all other ATRs, A320 CEOs along with some spare engines, adding that “we are working to close these transactions but it will be difficult to give a specific timeframe for its completion. Apart from this, we will continue to finance our new aircraft deliveries in the ordinary course as more planes are delivered.”
During the earnings call, Dutta had said: “We are working on the sale and lease back of our unencumbered assets which are in advanced stages of discussion.”
He added, “We are also in discussions with export credit agencies for obtaining moratorium towards principal repayment for aircraft on finance leases,” Dutta had said. These moves could help the airline raise up to ₹2,000 crore which is very important during these Covid-19 times, he had explained.
Currently, IndiGo is operating 400 flights daily, and “these flights are contributing positively and will help us set off our fixed costs partially,” the airline had said during its earnings call. Besides this, to cut costs, 21 aircraft of IndiGo’s entire fleet has been parked since the beginning of 2020, according to information available on airfleets.net .
Due to the losses caused by the Covid-19 pandemic, in recent times, the airline has had to resort to many harsh steps, including salary cuts, furloughs, and letting go of employees. Between Q4FY20 and Q1FY21, its employee cost fell by 30 per cent.