IndiGo targets 40% fleet on finance lease by 2030: CFO Gaurav Negi at AGM

IndiGo expects 30-40 per cent of its fleet to be on finance lease by 2030, reflecting a shift away from its long-standing reliance on sale-and-leaseback deals, Chief Financial Officer Gaurav Negi told shareholders at the airline’s annual general meeting on Wednesday. 

As of June 30, IndiGo had 416 planes in its fleet. Of these, 69 are under finance leases, 336 under operating leases and 11 under damp leases. This works out to about 17 per cent of the fleet currently being on finance lease.

 

Most of IndiGo’s fleet today is on operating leases, where an aircraft is rented from a lessor for a fixed term and returned at the end of the lease. One common form of operating lease is the sale-and-leaseback, where the airline sells an aircraft to a lessor and leases it back, generating cash but giving up ownership.

 

On the other hand, a finance lease gives IndiGo ownership-like control for most of an aircraft’s useful life, with payments structured like loan instalments and the aircraft recorded as an asset. Moving toward finance leases gives IndiGo greater fleet control, predictable long-term costs, and potential gains from residual aircraft value.

 

"We are increasing our fleet. We have got an order backlog for 920 planes. Someone asked us what would be the ownership (percentage) by 2030? We estimate that 30-40 per cent of the fleet, which would be about 600 planes, will be our own fleet in terms of finance lease, by 2030," Negi stated.

 

IndiGo CEO Pieter Elbers, during the AGM, said that about 40 per cent of the airline's total passenger-carrying capacity would be deployed on international routes by 2030, compared with around 20 per cent at present. 

 

He added that the response to IndiGo's business class product -- called Stretch, launched last year on select metro-to-metro domestic routes -- has been extremely positive. The airline has since deployed it on India–Bangkok routes and is planning to extend it to services in Singapore and Dubai.