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PL Sector Report - Aviation - Sector Update - Dissecting the delivery schedule of Airbus
Prabhudas Lilladher Pvt Ltd
Aviation - Jinesh Joshi - Research Analyst, Prabhudas Lilladher Pvt Ltd
Sector Update - Dissecting the delivery schedule of Airbus
In June, Indigo placed an order with Airbus for 500 A320 family aircraft scheduled for delivery between 2030-2035. As of 4QFY23, Indigo had fleet size of 304 with a backlog of 480 aircrafts. With an additional order of 500 aircrafts, Indigo’s order book has bloated to 980. As the order is placed with Airbus we have analysed the order and backlog schedule of the aircraft manufacturer to get a sense on deliveries as Indigo’s fleet size outlook is linked to it.
Exhibit 1: Airbus has a backlog of 7,967 aircrafts as of 1HCY23
| Particulars | 2018 | 2019 | 2020 | 2021 | 2022 | 1HCY2023 |
| Orders (Net) | 747 | 768 | 268 | 507 | 820 | 1,044 |
| Deliveries | 800 | 863 | 566 | 611 | 661 | 316 |
| Backlog | 7,577 | 7,482 | 7,184 | 7,082 | 7,239 | 7,967* |
Source: Airbus *1HCY23 backlog is calculated as: PY Backlog + orders – deliveries
In 1HCY23, Airbus received orders of 1,044 aircrafts (higher than its annual order intake over the last 5 years) led by bulk orders from Indigo (500) and Air India (210). However, the delivery schedule indicates some issues with respect to timeliness. In 1HCY23, deliveries stood at 316. If we annualize this figure, forecasted delivery for 2023 can be at 632 which is 21%/27% lower than 2018/2019 (pre-COVID base) respectively.
Are deliveries on track to Indigo?
From an Indigo standpoint, delivery schedule of A320 family is of prime importance given its dominance in the airline major’s overall fleet mix. As can be seen in the exhibit below, ~74-79% of the deliveries by Airbus are within the A320 family.
Exhibit 2: 70%+ deliveries for Airbus are within the A320 family of aircrafts
| Particulars | A220 | A320 Family | A330 | A350 | A380 |
| 2018 | 3% | 78% | 6% | 12% | 2% |
| 2019 | 6% | 74% | 6% | 13% | 1% |
| 2020 | 7% | 79% | 3% | 10% | 1% |
| 2021 | 8% | 79% | 3% | 9% | 1% |
| 2022 | 8% | 78% | 5% | 9% | 0% |
In 1QFY24/2QCY23, Airbus delivered 189 aircrafts with A320 family forming ~79% of total deliveries. Indigo received 12 aircrafts from Airbus in 1QFY24 resulting in a share of 8% in Airbus’ A320 deliveries. Annualizing 1HCY23 deliveries of 316 and assuming Indigo’s share of 8% remains intact in A320 deliveries (79% in 1QFY24) total supplies to Indigo can be 40 in CY23. So far, Indigo has received 16 aircrafts (gross addition excluding retirements/replacements) in 1HCY23 leaving a balance of 24 to be received in 2HCY23.
Indigo had fleet count of 304 in FY23. Adding 12 aircrafts delivered in 1QFY24 takes the total to 316. Adding indicative 24 aircrafts to be received in 2HCY23 would lead to a fleet size of 340 by Dec-23 (3QFY24). Thus, Indigo would need to add about 10 aircrafts in 4QFY24 to reach a fleet size of 350 (guidance given at the analyst day held in March-23). If we assume some of the older fleet will get replaced (total does not rise) from the new deliveries, Indigo is well on track to end with a fleet size of 340-350 in FY24E. Retain BUY on the stock with a TP of Rs2,993 (7x EV/EBITDAR Dec-24E)
InterGlobe Aviation (INDIGO IN)
Rating: BUY | CMP: Rs2,705 | TP: Rs2,993
| Y/e Mar | FY22 | FY23 | FY24E | FY25E |
| Sales (Rs. m) | 2,59,309 | 5,44,465 | 6,61,439 | 7,37,998 |
| EBITDA (Rs. m) | 8,590 | 68,212 | 1,76,453 | 2,17,640 |
| Margin (%) | 3.3 | 12.5 | 26.7 | 29.5 |
| PAT (Rs. m) | -61,618 | -3,058 | 70,479 | 93,409 |
| EPS (Rs.) | -159.9 | -7.9 | 182.8 | 242.3 |
| Gr. (%) | 5.6 | NA | NA | 32.5 |
| DPS (Rs.) | - | - | - | - |
| Yield (%) | - | - | - | - |
| RoE (%) | 208.3 | 5 | NA | 170.7 |
| RoCE (%) | NA | NA | NA | 202.8 |
| EV/Sales (x) | 3.5 | 1.5 | 1.3 | 0.9 |
| EV/EBITDA (x) | 160.9 | 19.1 | 7.9 | 6.1 |
| PE (x) | NA | NA | 14.8 | 11.2 |
| P/BV (x) | NA | NA | 130.1 | 1 |
