Indigo faces turbulence

about 6 months ago
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Indigo Airlines slipped 2% on opening at Rs.1421.45 and went down to an intraday low at Rs.1389, going down almost 4.5%. Its LC is at 10% at Rs.1305.45.

The stock is down as its back on the aviation regulator Directorate General of Civil Aviation (DGCA) radar. The DGCA has barred the operator from operating Airbus A320 and 321 Neo aircraft having turbine blades built with titanium, which is prone to damage leading to mid-air engine shut down. At a meeting held yesterday, the DGCA found the steps taken by the airline, to replace the faulty engines unsatisfactory. It warned that a large portion of IndiGo’s fleet could be grounded if the carrier fails to meet 31 January, 2020, deadline.

After 13 incidents of in-flight shutdowns in one year of which three happened within 4 days, last month, the DGCA had asked Indigo to change engines on 16 of its Airbus A320neos, within 15 days, failing which it will have  to take action of ‘grounding.’

This is a huge fleet which could be grounded – as at 30th Sept 2019, Indigo had 89 A320Neos, 129 A320Neos, 6 A321Neos, and 21 ATRs.  Of this, 91 A320Neos and 7 A321Neos are all powered by  Pratt & Whitney (P&W) engines – one of the two engines fitted in 23 aircraft have been modified.

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