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Indian aviation industry cleared for takeoff despite engine woes: ICRA report

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New Delhi, April 12 (IANS) The Indian aviation industry is set to scale new heights. Despite facing supply chain challenges and engine failures, the industry is poised for significant growth in the coming years, according to a recent report by the ICRA Limited, a leading credit rating agency.

“In FY2024, Go Airlines (India) Limited grounded half of its fleet due to faulty P&W engines, which led to the stalling of its operations. InterGlobe Aviation Limited (IndiGo) had also grounded more than 70 aircraft due to the Pratt & Whitney (P&W) engine issues, as of February 2, 2024, including an issue from powder metal (used to manufacture certain engine parts) contamination with its P&W fleet,” the report said.

It is estimated that 24-26 per cent of the total fleet of the Indian airlines in operations was grounded by March 31.

“Considering the bulk recall of the engines globally by P&W and other existing issues with the Original Equipment Manufacturer (OEM) engines, the testing by the P&W is likely to take longer at 250-300 days,” the report said.

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“This will result in high operating expenses towards the cost of grounding, an increase in lease rentals due to an additional aircraft being taken on lease to offset the grounded capacity, rising lease rates and lower fuel efficiency (due to replacement with older aircraft taken on spot lease), which will adversely impact an airline’s cost structure,” it added.

However, healthy yields, high passenger load factor (PLF) and partial compensation available from OEM’s engines would help absorb the impact to an extent.

Meanwhile, the report also claimed that the capacity deployment for March 2024 was higher by 1.8 per cent over March 2023 (93,785 departures in March 2024 against 92,098 departures in March 2023).

“Further, the number of departures in March 2024 was higher by 9.2 per cent on a sequential basis,” ICRA said in its report.

The report said that for March 2024, domestic air passenger traffic stood at 135 lahk against 129 lahk in March 2023, implying a YoY growth of 4.9 per cent.

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“However, on a sequential basis, domestic air passenger traffic in March 2024 was higher by 6.9 per cent, with February having a lower number of days than March,” it said.

The ICRA said that while some airlines have adequate liquidity and/or financial support from a strong parent, supporting their credit profiles, the credit metrics and liquidity profile of others will remain under stress over the near term, despite some improvement relative to the last few years.

With half of Go Airlines (India) Limited’s fleet grounded due to faulty P&W engines, it faced payment defaults with vendors, aircraft lessors and financial creditors.

Consequently, GoFirst filed for insolvency with the National Company Law Tribunal (NCLT), which imposed a moratorium on the airline’s assets and prohibited the lessors from repossessing their aircraft, which was upheld in the National Company Law Appellate Tribunal (NCLAT).

The airline lost its airline code ‘G8’ assigned by the International Air Transport Association (IATA) for being non-operational since May 2023.

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The NCLT in, February 2024, extended the deadline for the completion of the resolution process of GoFirst by another 60 days. A two-member bench of the Delhi-based NCLT admitted the plea filed by the resolution professional (RP) of GoFirst seeking an extension of the timeline to complete the corporate insolvency resolution process (CIRP).

“The maximum period for completing the resolution process as per Section 12 of the IBC (Insolvency and Bankruptcy Code) is 330 days, which ended on April 4, 2024. However, the NCLT on April 8, 2024, granted an extension of another 60 days till June 3, 2024, to complete the CIRP,” the report said.

–IANS

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Ex-Porsche engineer Manfred Harrer joins Hyundai in top role

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Seoul, May 28 (IANS) Hyundai Motor Group said on Tuesday it has hired a former Porsche engineer who led the development of the luxury sports car brand’s first electric vehicle (EV), Taycan, as it strives to further improve its vehicles’ performance.

The South Korean carmaker has appointed Manfred Harrer as executive vice president and head of the newly established Genesis & Performance Development Tech Unit, the group said in a statement.

The unit operates under the Research and Development (R&D) division of Hyundai Motor and Kia, two key affiliates of the automotive group. Harrer reports to Yang Heui-won, president of the Hyundai-Kia R&D Division, it said.

Harrer, 51, has worked on diverse projects, including chassis development, electronic systems, and software development, at leading carmakers such as Audi AG, BMW Group, and Porsche AG in the past 25 years, reports Yonhap news agency.

He also previously worked at Apple as senior director of product design engineering.

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The group expects his expertise and leadership capabilities to expedite its electrification transition, securing top-tier leadership in the upcoming EV era and enhancing the marketability of Hyundai Motor and Kia’s products.

Harrer said he is dedicated to playing a pivotal role in the future evolution of luxury Genesis models as well as Hyundai and Kia’s high-performance vehicles.

–IANS

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Govt bonds worth Rs 29,000 crore coming up for auction on May 31

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New Delhi, May 27 (IANS) The Finance Ministry on Monday announced the sale of government bonds worth Rs 29,000 crore in three lots through auctions to be conducted by the Reserve Bank of India in Mumbai on May 31.

The first lot comprises “New Government Security 2029” for a notified amount of 12,000 crore through a yield-based auction using multiple price methods. The second lot of “New GOI SGrB 2034” worth 6,000 crore will also be auctioned through a yield-based auction using multiple price method while the third set of 7.34 per cent Government Security 2064 worth 11,000 crore will be auctioned through price based auction using multiple price method.

The government will have the option to retain additional subscriptions up to 2,000 crore against each of the three securities. Up to five per cent of the notified amount of the sale of the securities will be allotted to eligible individuals and institutions as per the Scheme for Non-Competitive Bidding Facility in the Auction of Government Securities.

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Both competitive and non-competitive bids for the auction should be submitted in electronic format on the Reserve Bank of India Core Banking Solution (E-Kuber) system on May 31, 2024. The non-competitive bids should be submitted between 10:30 a.m. and 11:00 a.m. and the competitive bids should be submitted between 10:30 a.m. and 11:30 a.m.

The result of the auctions will be announced on May 31, 2024 (Friday) and payment by successful bidders will be on June 03, 2024 (Monday).

The Securities will be eligible for “When Issued” trading in accordance with the RBI guidelines.

–IANS

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Delhi HC upholds order directing SpiceJet to return aircraft to TWC Aviation

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New Delhi, May 27 (IANS) The Delhi High Court on Monday declined to intervene in a single judge bench’s order directing airline SpiceJet to return two Boeing aircraft with engines to TWC Aviation over unpaid dues.

A division bench of Justices Rajiv Shakdher and Amit Bansal has directed SpiceJet to comply with the order by June 17.

Previously, the single judge had mandated that SpiceJet hand over the aircraft, engines, and all relevant technical records to TWC Aviation by May 28.

This decision came after senior advocate Amit Sibal, representing SpiceJet, agreed to the bench’s suggestion to extend the compliance deadline if SpiceJet withdrew its appeal.

SpiceJet accepted the proposal and withdrew the appeal.

TWC Aviation, the owner of the aircraft and engines, initiated a lawsuit seeking a permanent injunction against SpiceJet. The suit alleged that the aircraft were leased to SpiceJet for 12 months at a monthly rent of $180,000. SpiceJet, however, failed to pay the lease rentals, prompting the creation of amendment agreements to accommodate payment difficulties due to the Covid-19 pandemic.

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Despite these adjustments, SpiceJet breached the agreements.

TWC Aviation sought enforcement of a UK court’s order directing SpiceJet to return the aircraft immediately.

The single-judge bench observed that the separate use of aircraft frames and engines by SpiceJet would significantly reduce their value for TWC Aviation and noted the airline’s failure to pay the dues. Ruling in favour of TWC Aviation, it stressed that SpiceJet could not continue to use the aircraft and engines without fulfilling its payment obligations given the acknowledged dues.

–IANS

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LIC Q4 net profit at Rs 13,763 crore, declares dividend of Rs 6 per share

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New Delhi May 27 (IANS) Life Insurance Corporation of India (LIC) on Monday reported a 2.5 per cent increase in net profit at Rs 13,763 crore for the January-March quarter of the financial year 2023-24 compared to the corresponding figure of Rs 13,421 crore in the same period last year.

The country’s largest announced an interim dividend of Rs 6 per share.

The insurance behemoth also reported an improvement in its asset quality as gross non-performing assets (GNPA) fell to 2.01 per cent from 2.56 per cent in the year-ago period.

The value of new business of the company rose by 4.66 per cent to Rs 9,583 crore with the margin increasing by 0.6 per cent to 16.8 per cent.

The insurance giant sold a total of 2.03 crore policies in the individual segments compared to 2.04 crore policies sold in FY23.

In the fourth quarter, LIC witnessed an uptick in its Annual Premium Equivalent (APE), recording a 10.7 per cent increase to Rs 21,180 crore compared to Rs 19,137 crore in the previous year.

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The company’s Assets Under Management (AUM) increased to Rs 51.21 lakh crore as on March 2024 as compared to Rs 43.97 lakh crore on March 31st, 2023 registering an increase of 16.48 percent year on year.

The solvency ratio of the insurer was at 1.98 per cent up from 1.87 per cent last year.

–IANS

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Goldman Sachs ups India’s GDP growth forecast

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New Delhi, May 27 (IANS) Leading global financial firm Goldman Sachs has revised its forecast for India’s GDP growth by 10 basis points to 6.7 per cent as it expects the government’s heavy investments in big-ticket infrastructure projects to continue with the huge dividend coming in from the RBI.

“Going forward, we expect investment growth momentum to sustain with extra fiscal space for infrastructure spending given a higher than expected dividend transfer by the RBI. As a result, we recently revised our growth forecasts for 2024 slightly higher by 10 bps to 6.7 per cent,” Andrew Tilton, head of emerging markets economic research at Goldman Sachs said in a note.

“In India, growth momentum remains strong, and while we think core inflation will bottom out in April-June, we expect it to be around 4.0 – 4.5 per cent in July-December,” the financial company said.

However, the RBI’s monetary policy committee members have recently sounded cautious on sticky food inflation and may want to see monsoons progress and the summer crop sowing to assess the food inflation outlook in July-December, before pivoting towards monetary policy easing, the report said.

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“Taking into account these developments, we push our RBI rate cut call back by one quarter to October-December, with the first cut most likely in the December 2024 meeting,” the report added.

The report also came on a day when the IMD confirmed its forecast of above-average monsoon rains this year which are expected to spur production in the agricultural sector that was hit by erratic weather last year.

–IANS

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