IndiGo surges 8% on report airline in talks to lease back 12 ATR aircraft

Shares of InterGlobe Aviation -- the parent firm of India's largest airline by market share IndiGo -- soared 8 per cent to Rs 1,015 on the BSE on Wednesday amid reports that the airline is in talks with with two lessors to sell and lease back 12 of its ATR 72-600 aircraft and their engines.

"The conversations with at least two lessors — Aergo Capital and DAE — have been going on for the past few days... 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," said a report by The Hindu Businessline.

The airline confirmed to the organisation that it is "working to close these transactions but it will be difficult to give a specific timeframe for its completion". Apart from this, the airline said, it will continue to finance their new aircraft deliveries in the ordinary course as more planes are delivered.

During the analysts' call post Q1FY21 results, Ronojoy Dutta, chief executive officer of the airline had said that the airline was working on the sale and lease back of their unencumbered assets which are in advanced stages of discussion.

"We are also in discussions with export credit agencies for obtaining moratorium towards principal repayment for aircraft on finance leases,” he had said. These moves could help the airline raise up to Rs 2,000 crore which is very important during these Covid-19 times, he had explained.

During its board meeting on August 10, the airline had approved to raise Rs 4,000 crore through an issue of equity shares by way of a qualified institutions placement.

For June quarter of FY21, the airline reported a record loss of Rs 2,844 crore, while revenue plunged 92 per cent on a yearly basis to Rs 766.7 crore during the quarter under review. At the end of the quarter, IndiGo had 274 aircraft in its fleet, up from 235 in the same time last year. Of these, it owns 29 aircraft. As of June 30, 2020, IndiGo had 25 ATRs in its fleet, in comparison with 18 ATRs at the same time last year.

At 11:27 am, the stock of the low-cost carrier was trading 7.8 per cent higher at Rs 1,014 per share on the BSE, as against 0.29 per cent, or 100 points, dip in the benchmark S&P BSE Sensex. A combined 4.49 million shares had changed the hands on the counter on the BSE and NSE till the time of writing of this report.