Indigo May Junk Sale-And-Leaseback Model, Opt For Outright Buys

Indigo May Junk Sale-and-leaseback Model, Opt For Outright Buys

IndiGo would replace the industry’s traditional sale-and-leaseback model for aircraft financing with outright purchases for some of its future fleet additions, underscoring the focus on cutting total ownerships expenses by the low-cost airline that Monday posted the biggest-ever quarterly profit in Indian aviation.

The adoption of the new business model, according to senior executives at the country’s largest carrier, would help IndiGo lower overall costs of fleet ownership. ET had reported six days ago that an imminent change in global accounting standards will, among other things, impact IndiGo’s aircraft lease rental strategy the most, and said that the new norms may prompt carriers to making outright purchases.

Chief financial officer Rohit Philip said IndiGo will shift to a model of outright purchase. Aircraft kept in the fleet for long are better owned than leased as direct ownership leads to cost optimisation, he said.  Read More…

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