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IndiGo is looking at ‘wet lease’ aircraft to meet travel demand

InterGlobe Aviation Ltd, the operator of India’s top airline IndiGo, said on Friday it was considering “wet lease” planes to meet growing demand for air travel as supply chain disruptions lead to delays in new aircraft deliveries.

A “lease with crew” arrangement is one where the lessor maintains operational control of the flights while providing the aircraft and crew.

The airline is extending some of its existing leases and delaying the return of aircraft, its new CEO Pieter Elbers said on a call with analysts after IndiGo reported a second-quarter loss.

“Another element that is being discussed today and we are still in the final stages of clarification is a possible wet lease operation,” Elbers said, noting that the market is recovering very quickly.

Demand for air travel both within India and to international destinations has recovered to near pre-Covid levels.

IndiGo said it was optimistic about returning to operating profitability in the current quarter after its July-September loss widened due to high fuel costs and foreign exchange losses.

The airline expects a roughly 25% jump in capacity in the current quarter compared to the previous quarter, measured by the number of available seats per kilometer. It also maintained its outlook for a 13-17% increase in capacity for the current fiscal year.

“In the coming years, we will build on our strong (domestic) foundations with more international aspirations,” Elbers said.

Fuel costs more than tripled from a year ago during the second quarter, while foreign exchange losses from a weaker rupee totaled 12 billion rupees ($145.88 million) in the three months, IndiGo said.

Yield, a metric of profitability, rose 21% to 5.07 rupees per kilometer from a year earlier, while the carrier’s load factor, or passenger carrying capacity utilized, increased to 79.2% from 71.1%.

The company’s loss widened to 15.85 billion rupees for the July-September quarter from 14.40 billion rupees a year earlier.

Operating income more than doubled to 124.98 billion rupees from 56.08 billion rupees a year ago.

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