Mumbai: India’s biggest Low Cost Carrier (LCC) IndiGo has approved an investment of $820 milliino into its aircraft leasing subsidiary InterGlobe Aviation Financial Services IFSC (IndiGo IFSC) to acquire new aircraft further. This investment signals a major strategic shift from its existing leasing model, which it has been following until now.
IndiGo had incorporated its leasing subsidiary IndiGo IFSC on October 12, 2023 as a wholly owned subsidiary of the company in the GIFT city, Ahmedabad, Gujarat.
The company will make the investment through a combination of 0.01% Non-Cumulative Optionally Convertible Redeemable Preference Shares (OCRPS) and equity shares, in one or more tranches. Currently, the company has reported a turnover of ₹289.9 crore in FY25, with a net profit of ₹11.1 crore.
IndiGo is looking to create a more balanced approach to its aircraft acquisition plans, even as the LCC aims to expand its reach further. Most LCCs worldwide use the sale and leaseback model, where the airline purchases an aircraft, and sell it to a lessor, while taking on the lease. This model has helped generate cash while freeing up capital, all while remaining debt-free.
Currently, IndiGo has 411 aircraft, with 365 operational while 46 remain grounded.
IndiGo’s parent company, InterGlobe Aviation, credited with posting profits in a highly capital-intensive yet low-margin business, has recently reported a net loss of ₹2,582 crore in Q2 as the company has been facing increasing external challenges, including higher forex expenses, despite reporting a 9.3% year-on-year increase in revenue to ₹18,555 crore.
