Budget carrier IndiGo has further reduced its capacity guidance for FY20 due to Airbus A320 Neo engine troubles, the airline told investors on Wednesday.
The Gurugram-based carrier said its capacity would grow at 22-23% year-on-year in FY20 from 25% announced in October 2019. At the beginning of the financial year, the largest domestic carrier had planned to grow at 30% y-o-y on the back of rapid aircraft addition from plane manufacturer Airbus SE.
In a presentation uploaded on the Bombay Stock Exchange, IndiGo said that directorate general of civil aviation’s (DGCA) order to ground each aircraft with unmodified engine for every addition of Neo plane with modified engines will have an impact on the capacity growth.
“The DGCA directive dated November 25 is likely to have an impact on future capacity. We expect a y-o-y capacity increase of 15-20% in Q4FY20 and 22-23% in FY20,” the communication said.
IndiGo, which commanded 47.4% domestic market share in October 2019, has been facing issues with its Pratt & Whitney-powered A320 Neo fleet, including mid-air engine shutdowns. “We are working with manufacturers P&W and Airbus to get sufficient spare engines to mitigate the risk,” the airline said.
The airline had trimmed its capacity guidance for the year from 30% to 25% y-o-y due to a delay in aircraft delivery by Airbus. IndiGo expects its profits to remain flat in Q3FY20 over the year-ago period. It had reported a profit of Rs 191 crore in Q3FY19.
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Source: Financial Express