India’s largest airline said on Friday it will channel the $820 million investment through equity shares and 0.01 per cent non‑cumulative optionally convertible redeemable preference shares (OCRPS), to be structured across multiple tranches.
In a significant move to reshape its fleet financing strategy, IndiGo, India’s largest airline by passenger volume and fleet, has approved a capital investment of $820 million (₹72.94 billion) in its wholly owned subsidiary, InterGlobe Aviation Financial Services IFSC Pvt Ltd (IndiGo IFSC).
The investment will be made through a combination of equity shares and 0.01 per cent non-cumulative optionally convertible redeemable preference shares (OCRPS), in one or more tranches. OCRPS are hybrid financial instruments that do not carry dividend obligations and can be converted into equity at the company’s discretion, offering flexibility in capital structuring.
“The funds raised by IndiGo IFSC shall be primarily deployed towards acquisition of aviation assets, thereby enabling ownership of aircraft,” the Gurugram-headquartered airline said in a statement on Friday morning.
Other than aircraft, “aviation assets” could also include aircraft engines and associated components. The move is expected to provide IndiGo with greater control over fleet costs, improved asset utilisation, and enhanced financial flexibility. IndiGo has around 1,000 aircraft on order through 2035.
To put this in context, the investment equals about 25.1 per cent of InterGlobe Aviation’s—the listed parent of IndiGo—reported cash and restricted cash reserves of ₹290 billion ($2.9 billion) in FY2024-25.
IndiGo IFSC was incorporated on October 12, 2023, under India’s Companies Act, 2013, and is registered as a finance company under the International Financial Services Centres Authority (IFSCA) Act, 2019. Based in Gujarat International Finance Tec-City International Financial Services Centre (GIFT IFSC), Ahmedabad, the entity is engaged in aircraft and aircraft engine leasing, as well as providing related financial services.
Shift to Ownership
Historically, IndiGo has operated a fleet predominantly reliant on operating leases. In recent years, the airline has moved toward a more balanced ownership structure and diversified financing models as part of a strategy to embrace prudent capital allocation and long-term value creation.
Salil Arora, founding partner at New Delhi-based law firm AviLeague Partners, told INFRASTRUCTURE TODAY, “With the proposed investment, IndiGo, which has so far relied predominantly on leased aircraft, will be able to gain access to wider financing avenues, eventually resulting in a more balanced ownership structure.”
IndiGo maintains high cash buffers to support lease obligations, aircraft acquisitions, and working capital requirements. This cash position, among the strongest in the Indian aviation sector, provides the airline with resilience against fuel price volatility and competitive pressures.
Due to its investor-friendly taxation framework and simplified regulatory environment, GIFT IFSC is rapidly emerging as a hub for leasing of transport assets in the aviation, maritime, rail and commercial vehicle segments, attracting both domestic and global lessors.
Other major Indian carriers with a presence in GIFT IFSC include Air India, which has completed aircraft leasing transactions through its registered entity, and Akasa Air, which has established a presence in the financial centre for future leasing operations.
– Manish Pant