IndiGo captain Ghosh switches seatbelt sign on as fare war looms

Moneycontrol BureauInterglobe Aviation—which operates IndiGo Airlines—told analysts in a post earnings call on Monday that it was looking to match the low fares offered by its rivals going forward.The stock was down 6 percent to Rs 919 intra-day Tuesday as its June quarter net profit fell 7 percent.“While it refrained from participating equally initially (in the fare war) the same resulted in steep decline in its load factor in June to 78 percent, from 87 percent YoY,” said a Kotak note on the company’s earnings, post the management call.“This has led to a rethink on management’s part; it is thus now looking to more aggressively match the market fares going forward, implying that near-term margins will remain under pressure,” the note said.CEO Aditya Ghosh said in the call that IndiGo may have to delay taking delivery of additional A320neo planes, because of the problems in the Pratt & Whitney engines, CNBC-TV18 reports.Fleet expansion will be key to IndiGo’s volume growth plans. According to Kotak Securities, Indigo is aiming for a 34 percent increase in capacity this financial year.Ghosh said A320neo operations continued to be a challenge, and the delaying of taking delivery would help Pratt & Whitney sort out engine problems in the A320neos.IndiGo is Airbus’s biggest customer for the fuel-efficient A320neos. But the company got delivery of only one A320neo in FY16, against the nine aircraft it had ordered. A320neo planes have been bogged down by technical glitches, leading to delayed deliveries across customers.IndiGo expects to have a total of 24 A320neos by the end of this fiscal, if there were no further problems with the delivery schedule, Ghosh said.