IndiGo share price plunges 6% after firm says NEO engine issues could hit revenues in FY20

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Published: December 5, 2019 5:03:04 PM

Shares of India's largest airline by market share Interglobe Aviation which runs the Indigo airline slumped on Thursday, after the firm said that the A320neo issue as one of the "revenue headwinds" of 2019-20.

Indigo CEO, Ronojoy Dutta, Rakesh Gangwal, Rahul Bhatia, InterGlobe Aviation, Sebi, IGE Group, latest news on indigoInterglobe Aviation shares closed 6% lower at Rs 1,320.20 on BSE.

Shares of India’s largest airline by market share Interglobe Aviation which runs the Indigo airline slumped on Thursday, after the firm said that the A320neo issue as one of the “revenue headwinds” of 2019-20. Interglobe Aviation shares closed 6% lower at Rs 1,320.20 on BSE. After the aviation watchdog DGCA ordered IndiGo to replace all A320neo aircraft with unmodified Pratt and Whitney (PW) engines by January 31, the airline on Wednesday designated this matter as one of the “revenue headwinds” of 2019-20, and said it is “likely to have an impact on future capacity”.  

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Interestingly, while both IndiGo and GoAir utilise same type of P&W engines, IndiGo flights are susceptible to mid-flight stallings because the airline was found to be using maximum thrust of the engine during take-off in order to save fuel, Bloomberg had reported earlier. However, the airline has now put a limit on take-off thrust, ET Now reported. Revving up the engine to full thrust wears the engine down but saves fuel. On the other hand, Go Air uses an alt-climb approach that applies less thrust, Bloomberg cited sources as saying.

IndiGo had reported around 13 engine shutdowns following which, DGCA had asked both GoAir and IndiGo to replace their faulty engines. The airlines have been served with a notice demanding that the carriers fix faulty engines before January 2020. Aviation regulator had also asked IndiGo to replace A320neo engines and also threatened grounding of an entire fleet if the airline fails to meet the deadline. IndiGo operates about 100 planes which are fitted with Pratt and Whitney engines. The DGCA, in multiple communications, asked the country’s largest airline to replace all unmodified engines in the Neo aircraft. The watchdog had also asked Indigo to ground one aircraft with the unmodified engine, for every addition of a plane with the modified engine.

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