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anshabhi
Topic Author
Posts: 2258
Joined: Thu Oct 20, 2016 10:40 am

6E defers A320Neo SLB plans

Wed Aug 02, 2017 2:19 pm

From 2015, the airline started inducting the new-generation A320 neo model, which has been plagued by engine issues. Thanks to the persisting problem, lessors are not keen. “Currently the engine problems are challenge to operations, it will be very difficult to place the A320 neos with reasonable price at least for next two years, with more than 40 neos coming in for IndiGo by end of FY18, it makes sense to hold onto them and capitalise later,” a rival airline official said.
In its post earnings call on Monday, IndiGo CFO Rohit Philip said that the short term leases (of around six years) for its aircraft was proving costly and henceforth the company will like to own aircraft as it believes that the A320 neo is technologically superior enough to be retained for a longer period. What Philip didn’t tell was that the same fuel efficient technology is one reason, why the A320 neo is no more demanding a premium. With IATA forecasting that crude prices will certainly remain low for the year, the premium paid for A320 neo will remain low. “Neos hit the market when fuel prices were close to $100 per barrel, there was considerable demand for that, the situation is not the same anymore,” said an official.


I am never stopped being impressed by the management of this airline... Imagine both 6E and AI have HQ in Delhi.

You may read this amazing article anyways:

http://wap.business-standard.com/articl ... 610_1.html
 
jbs2886
Posts: 2480
Joined: Wed Apr 01, 2015 9:07 pm

Re: 6E defers A320Neo SLB plans

Wed Aug 02, 2017 2:23 pm

anshabhi wrote:
From 2015, the airline started inducting the new-generation A320 neo model, which has been plagued by engine issues. Thanks to the persisting problem, lessors are not keen. “Currently the engine problems are challenge to operations, it will be very difficult to place the A320 neos with reasonable price at least for next two years, with more than 40 neos coming in for IndiGo by end of FY18, it makes sense to hold onto them and capitalise later,” a rival airline official said.
In its post earnings call on Monday, IndiGo CFO Rohit Philip said that the short term leases (of around six years) for its aircraft was proving costly and henceforth the company will like to own aircraft as it believes that the A320 neo is technologically superior enough to be retained for a longer period. What Philip didn’t tell was that the same fuel efficient technology is one reason, why the A320 neo is no more demanding a premium. With IATA forecasting that crude prices will certainly remain low for the year, the premium paid for A320 neo will remain low. “Neos hit the market when fuel prices were close to $100 per barrel, there was considerable demand for that, the situation is not the same anymore,” said an official.


I am never stopped being impressed by the management of this airline... Imagine both 6E and AI have HQ in Delhi.

You may read this amazing article anyways:

http://wap.business-standard.com/articl ... 610_1.html


What is so "impress[ive]" and "amazing"? The fact that they can make actual business decisions?
 
klakzky123
Posts: 688
Joined: Mon Jul 04, 2016 4:05 am

Re: 6E defers A320Neo SLB plans

Wed Aug 02, 2017 3:01 pm

jbs2886 wrote:
anshabhi wrote:
From 2015, the airline started inducting the new-generation A320 neo model, which has been plagued by engine issues. Thanks to the persisting problem, lessors are not keen. “Currently the engine problems are challenge to operations, it will be very difficult to place the A320 neos with reasonable price at least for next two years, with more than 40 neos coming in for IndiGo by end of FY18, it makes sense to hold onto them and capitalise later,” a rival airline official said.
In its post earnings call on Monday, IndiGo CFO Rohit Philip said that the short term leases (of around six years) for its aircraft was proving costly and henceforth the company will like to own aircraft as it believes that the A320 neo is technologically superior enough to be retained for a longer period. What Philip didn’t tell was that the same fuel efficient technology is one reason, why the A320 neo is no more demanding a premium. With IATA forecasting that crude prices will certainly remain low for the year, the premium paid for A320 neo will remain low. “Neos hit the market when fuel prices were close to $100 per barrel, there was considerable demand for that, the situation is not the same anymore,” said an official.


I am never stopped being impressed by the management of this airline... Imagine both 6E and AI have HQ in Delhi.

You may read this amazing article anyways:

http://wap.business-standard.com/articl ... 610_1.html


What is so "impress[ive]" and "amazing"? The fact that they can make actual business decisions?


Indian airlines have historically had management issues. Indigo has been the exception to that since it was founded. The country hasn't really had private airlines until fairly recently and many of those suffered from poor management like the state owned airlines.

You can't help but be impressed by an airline that is now dominating the local market and that's a market that has to face off against the state owned Indian Railways with crazy financing laws that make expansion extremely difficult.
 
Antarius
Posts: 2714
Joined: Thu Apr 13, 2017 1:27 pm

Re: 6E defers A320Neo SLB plans

Wed Aug 02, 2017 3:12 pm

jbs2886 wrote:
What is so "impress[ive]" and "amazing"? The fact that they can make actual business decisions?


Compared to the historical mismanagement of Airlines in India from AI, to some degree of 9W, to the disaster known as kingfisher, the fact that 6E has succeeded and thrived is impressive.

That said, For anshabhi, the anything that contains the word "India" is the greatest thing since sliced bread.
2020: SFO DFW IAH HOU CLT MEX BIS MIA GUA ORD DTW LGA BOS LHR DUB BFS BHD STN OAK PHL ISP JFK SJC DEN SJU LAS TXL GDL
 
jbs2886
Posts: 2480
Joined: Wed Apr 01, 2015 9:07 pm

Re: 6E defers A320Neo SLB plans

Wed Aug 02, 2017 3:25 pm

Antarius wrote:
jbs2886 wrote:
What is so "impress[ive]" and "amazing"? The fact that they can make actual business decisions?


Compared to the historical mismanagement of Airlines in India from AI, to some degree of 9W, to the disaster known as kingfisher, the fact that 6E has succeeded and thrived is impressive.

That said, For anshabhi, the anything that contains the word "India" is the greatest thing since sliced bread.


Yeah, I get that Indian airlines have historically been plagued by management issues, but seemed like a stretch to be so incredibly impressed. Your second comment is more what I was going for.
 
anshabhi
Topic Author
Posts: 2258
Joined: Thu Oct 20, 2016 10:40 am

Re: 6E defers A320Neo SLB plans

Wed Aug 02, 2017 4:46 pm

klakzky123 wrote:

You can't help but be impressed by an airline that is now dominating the local market and that's a market that has to face off against the state owned Indian Railways with crazy financing laws that make expansion extremely difficult.

Indian LCCs are now at level with Indian railways, primarily because of reduction in costs by airlines and abolishment of subsidies on air conditioned classes by Indian railways.
Railways itself expects airlines to carry more pax than itself in Air conditioned classes, by 2020. Railways is even planning to shut premium trains on 1500+ km routes, which take atleast 24 hours, compared to 2 or less by jets.


http://m.timesofindia.com/city/chennai/ ... 718222.cms
 
VTORD
Posts: 748
Joined: Sat Dec 22, 2012 9:45 pm

Re: 6E defers A320Neo SLB plans

Wed Aug 02, 2017 7:24 pm

anshabhi wrote:
Railways is even planning to shut premium trains on 1500+ km routes, which take atleast 24 hours, compared to 2 or less by jets.
http://m.timesofindia.com/city/chennai/ ... 718222.cms

This ridiculous fascination with shutting down IR is more impressive than Indigo's management! Do you actually have a source for this or is it more of your wishful thinking? The article you have quoted says nothing of that sort, quite the contrary:
However, railway traffic managers insist that there is no solid evidence of migration of passengers from railways to airlines. "There is an overall increase in the number of travellers. The loss in passengers is mostly in the unreserved segment," said a senior railways official based in Chennai.
 
nmraja
Posts: 146
Joined: Fri Jul 10, 2009 8:59 pm

Re: 6E defers A320Neo SLB plans

Wed Aug 02, 2017 8:32 pm

Shutting down Premium trains will be ok only for the EEPs who can opt for airlines. What about the people from the umpteen stops in between? Not every stop or even majority of the stops are served by Airports/Airlines.
Raja.
 
dtw2hyd
Posts: 8451
Joined: Wed Jan 09, 2013 12:11 pm

Re: 6E defers A320Neo SLB plans

Wed Aug 02, 2017 9:01 pm

anshabhi wrote:
...I am never stopped being impressed by the management of this airline... Imagine both 6E and AI have HQ in Delhi.


Inability to [SLB] flip is never a good sign. Without flipping quickly airline cannot induct at a rapid rate and may have to defer orders.

Probably someone more experienced with aviation finances like PlaneSmart can share his/her thoughts.
All posts are just opinions.
 
jbs2886
Posts: 2480
Joined: Wed Apr 01, 2015 9:07 pm

Re: 6E defers A320Neo SLB plans

Wed Aug 02, 2017 9:22 pm

dtw2hyd wrote:
anshabhi wrote:
...I am never stopped being impressed by the management of this airline... Imagine both 6E and AI have HQ in Delhi.


Inability to [SLB] flip is never a good sign. Without flipping quickly airline cannot induct at a rapid rate and may have to defer orders.

Probably someone more experienced with aviation finances like PlaneSmart can share his/her thoughts.


Exactly, and basically said there is no real benefit to them at this point (but probably paying a premium). This is also a fundamental shift in strategy...do they now keep planes longer? If so, do they expand more? Or keep the same planned expansion but cancel/defer orders?
 
anshabhi
Topic Author
Posts: 2258
Joined: Thu Oct 20, 2016 10:40 am

Re: 6E defers A320Neo SLB plans

Thu Aug 03, 2017 1:55 am

jbs2886 wrote:

Inability to [SLB] flip is never a good sign. Without flipping quickly airline cannot induct at a rapid rate and may have to defer orders.

Probably someone more experienced with aviation finances like PlaneSmart can share his/her thoughts.


Exactly, and basically said there is no real benefit to them at this point (but probably paying a premium). This is also a fundamental shift in strategy...do they now keep planes longer? If so, do they expand more? Or keep the same planned expansion but cancel/defer orders?[/quote]

Yes they will induct more. The above source, which is now hiding in a paywall, earlier stated they have raised money for these aircraft at very cheap interest rates, of 1.2%. Extending the duration of these bonds, would be offset by the profit that they will earn once A320Neo commends a premium.
They need these aircraft to expand first. IndiGo is anyways sitting on $1.6 billion cash.

VTORD wrote:
anshabhi wrote:
Railways is even planning to shut premium trains on 1500+ km routes, which take atleast 24 hours, compared to 2 or less by jets.
http://m.timesofindia.com/city/chennai/ ... 718222.cms

This ridiculous fascination with shutting down IR is more impressive than Indigo's management! Do you actually have a source for this or is it more of your wishful thinking? The article you have quoted says nothing of that sort, quite the contrary:
However, railway traffic managers insist that there is no solid evidence of migration of passengers from railways to airlines. "There is an overall increase in the number of travellers. The loss in passengers is mostly in the unreserved segment," said a senior railways official based in Chennai.



We are referring here to the Rajdhani. Most of the cities on map of Rajdhani have an airport at max 2 hour distance. And pls google a bit more. You woll find reference to this plan.
 
anshabhi
Topic Author
Posts: 2258
Joined: Thu Oct 20, 2016 10:40 am

Re: 6E defers A320Neo SLB plans

Thu Aug 03, 2017 1:57 am

jbs2886 wrote:

Inability to [SLB] flip is never a good sign. Without flipping quickly airline cannot induct at a rapid rate and may have to defer orders.

Probably someone more experienced with aviation finances like PlaneSmart can share his/her thoughts.


Exactly, and basically said there is no real benefit to them at this point (but probably paying a premium). This is also a fundamental shift in strategy...do they now keep planes longer? If so, do they expand more? Or keep the same planned expansion but cancel/defer orders?


Yes they will induct more. The above source, which is now hiding in a paywall, earlier stated they have raised money for these aircraft at very cheap interest rates, of 1.2%. Extending the duration of these bonds, would be offset by the profit that they will earn once A320Neo commends a premium.
They need these aircraft to expand first. IndiGo is anyways sitting on $1.6 billion cash.

VTORD wrote:
anshabhi wrote:
Railways is even planning to shut premium trains on 1500+ km routes, which take atleast 24 hours, compared to 2 or less by jets.
http://m.timesofindia.com/city/chennai/ ... 718222.cms

This ridiculous fascination with shutting down IR is more impressive than Indigo's management! Do you actually have a source for this or is it more of your wishful thinking? The article you have quoted says nothing of that sort, quite the contrary:
However, railway traffic managers insist that there is no solid evidence of migration of passengers from railways to airlines. "There is an overall increase in the number of travellers. The loss in passengers is mostly in the unreserved segment," said a senior railways official based in Chennai.



We are referring here to the Rajdhani. Most of the cities on map of Rajdhani have an airport at max 2 hour distance. And pls google a bit more. You will find reference to this plan.
That official is just like any other, defending his company.
 
dtw2hyd
Posts: 8451
Joined: Wed Jan 09, 2013 12:11 pm

Re: 6E defers A320Neo SLB plans

Thu Aug 03, 2017 4:34 pm

With $1B you can buy 20 A320NEOs and be out of cash, but you can SLB 100 frames and even make money because FMV may be higher than your heavily discounted volume price.

Cannot afford the premium support model 6E enjoying right now. Cannot skip heavy mx and interior refurbishment costs.

So, you always want to SLB or Dry lease early birds/troubled teens/prolonged adolescents. Also have new design engines on pay-by-the-hour.

BTW AI was able to SLB 21xB787s including morbidly obese troubled teens/lemons. 19xA32S and current 14 NEOs are on dry lease/PBH. 10 current ATR72s are also on dry lease.so does next batch of 10xATR72s.
All posts are just opinions.
 
anshabhi
Topic Author
Posts: 2258
Joined: Thu Oct 20, 2016 10:40 am

Re: 6E defers A320Neo SLB plans

Thu Aug 10, 2017 3:14 pm

The article referred in first post is now available for free here:

https://m.rediff.com/business/report/wh ... 170810.htm

@dtw2hyd. AI only makes SLB to reduce debt. 6E does that to earn money!
 
Planesmart
Posts: 2891
Joined: Sun Dec 05, 2004 3:18 am

Re: 6E defers A320Neo SLB plans

Thu Aug 10, 2017 8:43 pm

dtw2hyd wrote:
With $1B you can buy 20 A320NEOs and be out of cash, but you can SLB 100 frames and even make money because FMV may be higher than your heavily discounted volume price.

Cannot afford the premium support model 6E enjoying right now. Cannot skip heavy mx and interior refurbishment costs.

So, you always want to SLB or Dry lease early birds/troubled teens/prolonged adolescents. Also have new design engines on pay-by-the-hour.

These are all good reasons why a rapidly growing airline, in a rapidly growing market, uses SLB.

Early delivery models are discounted for a reason.

If the discount is very high, then the SLB unit price could capture this upfront. Or if the leasor doesn't share the leasee's confidence about FMV, then distribution / capital sharing at end of lease can be written into a side agreement (though this can have adverse tax implications).

The attractive Bond rate could be used to partly fund the lease funding syndicates, allowing finer lease pricing.

Unless the Indian Government has indicated changes to leasing and taxation are in the wings, making SLB less attractive, I can't understand the change.

Perhaps leasor A320NEO margins have widened due to the engine issues, or perhaps engine-related compensation only covers the first owner, in which case, when resolved, SLB will resume as normal.
 
vadodara
Posts: 1146
Joined: Mon Feb 20, 2017 7:45 pm

Re: 6E defers A320Neo SLB plans

Fri Aug 11, 2017 2:57 am

Probably trying to purchase the Neo's due to expected increase in international flights.

They have been ramping-up ME flights; perhaps, getting ready to expand the range to S. Europe/Far East/Africa.

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