Pratt, Airbus Compensation Helps IndiGo Beat Profit Estimates

(Bloomberg) -- Airbus SE and enginemaker Pratt & Whitney’s compensation to IndiGo for glitches that grounded jets helped India’s biggest airline post quarterly profit that exceeded analyst’s estimates.

The problems plaguing the carrier’s operation since July were fixed earlier this month after Pratt & Whitney managed to replace the engines that power the Airbus’s A320neo jets. The world’s biggest buyer of the aircraft grounded as many as nine of its brand new planes on some days, denting the schedule and on-time performance, a key differentiator for budget carriers. IndiGo has 430 A320neo jets on order, on top of a previous order for 100 aircraft.

Pratt spent $10 billion building an fuel efficient engine to compete with the likes of General Electric Co., but has been working to fix durability issues and production snags which have hit delivery schedules. The geared turbofan engines can power new jets from Airbus, Bombardier Inc. and Embraer SA. IndiGo didn’t quantify the compensation received from Airbus and Pratt.

Profit for the quarter ended Sept. 30 almost quadrupled to 5.52 billion rupees ($85.2 million), the airline said in a statement. That compares to an average forecast of 3.21 billion rupees from 11 analysts’ estimates compiled by Bloomberg. The airline, operated by InterGlobe Aviation Ltd., said "better revenue management compared to last year" also helped.

IndiGo said it expects capacity to grow 14 percent in the quarter ending December, and 19 percent for the year ending March 31, 2018.

To contact the reporter on this story: Anurag Kotoky in New Delhi at akotoky@bloomberg.net.

To contact the editors responsible for this story: Anand Krishnamoorthy at anandk@bloomberg.net, Unni Krishnan, Arijit Ghosh

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