Print   Close

InterGlobe Aviation share dips 5% as DGCA orders engine replacement in 15 days

BusinessToday.In     October 29, 2019

Share price of InterGlobe Aviation Ltd, parent of the country's largest airline IndiGo, plunged 5.37% intraday after air safety watchdog Directorate General of Civil Aviation (DGCA) instructed the airline to change engines on at least 16 of its Airbus A320neos within a fortnight, following three instances of in-flight engine shut-downs.

Airline's biggest-ever quarterly loss of Rs 1,062 cr on revenue of Rs 8,539.8 crore recorded in the September quarter also led to the fall in share price today, as this was a sharp turnaround from the previous quarter when the low-cost carrier (LCC) reported highest-ever net profit of Rs 1,203 crore in its 13-year history.

Fix Pratt & Whitney engine issue in 15 days or get grounded: DGCA tells IndiGo

InterGlobe Aviation share price opened with a loss of 4.05% on Tuesday and fell 5.37% intraday to Rs 1,378.75 on the BSE.

The stock has lost 15% value in one week and over 23% in last month, although gained an overall 21% year-to-date. Interglobe Aviation stock price is currently trading lower than its 5, 20, 50, 100 and 200-day moving averages. The bearish momentum of the share goes in-line with the aviation sector, that has fallen 3.12% intraday. However, the stock has underperformed the sector by 0.48%.

Volume-wise, 1.4 lakh and 34.4 lakh shares were trading on BSE and NSE counters, both above the 5,10 and 30-day average recorded volume. Although, market depth chart suggests 50% buying and 50% selling on today's share value.

IndiGo posts net loss of Rs 1,062 crore in Q2 due to high maintenance cost

The move by the DGCA comes after the airline reported on October 24, 25 and 26 incidents of in-flight engine shut-downs on the A320 (Neo) fitted with Pratt-Whitney (PW) engines, after which the industry regulator conducted an analysis over the Diwali weekend.

"We have decided that all aircraft with unmodified low-pressure turbine (LPT) engines, which have clocked more than 2,900 hours, have to be fitted with one modified LPT engine in the next 15 days," said Director General of Civil Aviation Arun Kumar and added,"Failing which, all these aircraft shall be grounded. This has been done after studying the pattern and evaluating the risk".

IndiGo is getting old while it battles slowdown and aggressive rivals

"We are continuing to work with the authorities and will take necessary action, as required, going forward," IndiGo's spokesperson said on Monday.

Commenting on the airlines' poor performance in Q2, Ronojoy Dutta, chief executive officer (CEO), IndiGo said in a statement, "In a historically weak quarter, we registered a negative profit before tax margin of 12. 7 per cent compared to 16 per cent margin loss registered in the same quarter last year. While our revenue performance was much better during the quarter, the losses were accentuated by forex losses on operating lease liabilities created under IND AS 116 and re-assessment of accrual estimates for future maintenance cost."

By Rupa Burman Roy

Tata Motors share price rallies 15% on Q2 earnings, equity raising plans

Share Market Live: Sensex climbs 650 points, Nifty crosses 11,800; Tata Motors top performer

URL for this article :
@ Copyright 2019 India Today Group.