InterGlobe Aviation skids on buzz of DGCA warning

InterGlobe Aviation fell 1.78% to Rs 1424.60 on reports that the aviation regulator was dissatisfied with Indigos efforts to modify the glitch-prone older Pratt & Whitney (PW) engines installed on Airbus A320Neo aircraft.

Nov 26, 2019 05:11 IST capital market

Indias aviation regulator, the Directorate General of Civil Aviation (DGCA), on Monday reportedly warned IndiGo that the airlines efforts to modify the glitch-prone older Pratt & Whitney (PW) engines installed on Airbus A320Neo aircraft were not satisfactory. This means a significant portion of IndiGos fleet could be grounded if the carrier fails to meet 31 January, 2020, deadline, media reports suggested.

The regulator said that for every new A320Neo aircraft that IndiGo adds to its fleet henceforth, it would have to ground a similar aircraft with unmodified engines. The grounded aircraft can be allowed a fresh schedule once its engines are replaced, DGCA said. This process may remain in force till all the engines in the fleet have been replaced.

On 1 November, DGCA had directed IndiGo to replace P&W engines with modified LPT (low pressure turbine) on 97 Airbus A320Neo aircraft by 31 January, following a series of engine incidents.

InterGlobe Aviation reported a consolidated net loss of Rs 1061.99 crore in Q2 September 2019 as against a net loss of Rs 651.54 crore in Q2 September 2018. Consolidated net sales increased by 31% to Rs 8105.19 crore in Q2 September 2019 over Q2 September 2018.

Indigo is Indias largest passenger airline with a market share of 48.2% as of September 2019.

On the technical front, the stocks RSI (relative strength index) stood at 39.71. The RSI oscillates between zero and 100. Traditionally the RSI is considered overbought when above 70 and oversold when below 30.

The stock was trading below its 50-day placed at Rs 1626.38 and 200-day moving average (DMA) placed at Rs 1506.19.

The counter witnessed steep volatility over the past two months. The scrip corrected 25.37% in 18 sessions to 1,410.30 on 29 October 2019 from its close of Rs 1889.65 on 30 September 2019. From there on, the scrip bounced back 8.49% to Rs 1,530.10 on 8 November 2019.

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