FI2008: Kingfisher slows fleet expansion

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Kingfisher Airlines has finalised a new fleet plan which include significantly slower expansion of its Airbus A320 and ATR 72 fleets, delayed Airbus A380 deliveries and potentially the sale of two A340-500s.

The airline has been working on a new fleet plan since unveiling plans in December to merge with Air Deccan. The two carriers both had large outstanding orders for A320 family aircraft and ATR 42/72 turboprops which chairman Vijay Mallya says were clearly too many given current market conditions.

Mallya says the carrier has not cancelled any of its orders but most of its future deliveries have been deferred. Under the new fleet plan, the carrier will take only eight new aircraft per year from 2009.

“We won’t be inducting as many as originally planned,” Mallya told reporters during a briefing at the Farnborough air show.

According to Flight’s ACAS database, Kingfisher currently has 29 A320s and 16 ATR 72s on outstanding order while Deccan has 52 A320s and 21 ATR 72s. These aircraft were originally all going to be delivered by 2013, which would have required deliveries of over 20 aircraft per year for the merged carrier.

Mallya says Kingfisher also has opted to return two Airbus A320s at the conclusion of their leases later this year. These came from the Deccan fleet and are the first aircraft to exit either Deccan or Kingfisher.

But the A320 fleet will still grow by three before year-end because Kingfisher will take five additional A321s this year.

Deccan and Kingfisher formally merged on 7 July and yesterday their air operators’ certificate was combined into one.

The new Kingfisher currently operates a fleet of 87 aircraft which consists of two Airbus A330-200s, 48 A320 family aircraft and 37 ATR 72s. Kingfisher’s fleet at the end of this year will comprise of 103 aircraft consisting of 51 A320s, 42 ATR 72s, five A330-200s and five A340-500s.

Kingfisher has recently completed sale and leaseback deals for all 10 of the new A330/A340s. But Mallya reveals Kingfisher may sell two of these A340-500s this year, which would give it a year-end fleet of 101 aircraft.

Mallya says three of the carrier’s new A340-500s will be used to launch a Bangalore-San Francisco non-stop service. He says the other two were going to be used to operate a Mumbai-New York service but this plan may be scrapped because there is too much capacity already in this market.

“I have three offers to buy them. I wasn’t expecting it. I got them nonetheless,” he says.

Mallya says the five A380s which Kingfisher ordered in 2005 also have been deferred by about another six months. Kingfisher was originally going to take its first A380 in 2010 and this was later slipped to 2011 due to production delays.

“We’re now looking at 2011 or 2012,” Mallya says. “We have opted for the maximum operating weight so there will be another six-month delay.”

He adds there will be no penalty payments received from Airbus for this additional delay because “I’ve opted to go for that extra weight … you can’t penalise them for that.”

Kingfisher’s 2005 order also included five A350s and five A330-200s. In 2006 it ordered five A340-500s. Last year Kingfisher increased its A350 order to 15, its A330 order to 10 and its A340 order to 10.

Mallya says after taking five A330s and five A340s this year, Kingfisher will take a breather next year with no widebody deliveries. This he says will allow its new long-haul routes to stabilise before more expansion is pursued in 2010. In 2010, Kingfisher is now scheduled to take four additional A330-200s.