Shares of InterGlobe Aviation were slipping on Wednesday after the company said it expects for a large number of its planes to be grounded due to maintenance issues with some of its engines.
What Happened: IndiGo, India’s largest airline, is anticipating an increase in groundings during the fourth quarter, reaching the “mid-30s,” due to a recurring powder metal issue within Pratt & Whitney engines. This announcement follows the recent grounding of around 40 aircraft due to the same problem.
In a statement, the airline expressed, “We have recently received additional information on the powder metal issue from Pratt & Whitney, and based on our preliminary assessment, we anticipate Aircraft on Ground (AOG) in the range of midthirties in the fourth quarter due to accelerated engine removals.” It clarified that these groundings would be additional to the existing grounded aircraft.
Why It Mattters: Earlier this year, Pratt & Whitney had disclosed the impact of the powder metal issue, affecting its new generation GTF aircraft engine. In July, the company identified a rare powder metal defect that could cause engine component cracks in the twin-engined Airbus A320neo, prompting accelerated inspections.
These inspections are expected to result in the grounding of 600-700 Airbus jets between 2023 and 2026, with around two-thirds of the engine removals scheduled for 2023 and early 2024.
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During its recent second-quarter earnings call, IndiGo had already indicated the likelihood of increased engine removals in the fourth quarter, leading to a higher number of groundings in response to this powder metal issue.
Nevertheless, IndiGo maintained its full-year capacity growth forecast, which it anticipates to be “in the north of mid-teens.”
Price Action: InterGlobe Avaiation shares were down 1.06% at ₹2,558.15 on Wednesday.
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