 "IndiGo shares gain most since 2016 on $30-bn Airbus aircraft order")
Indian budget airline IndiGo headed for its biggest gain in more than three years after placing a blockbuster order with Airbus SE worth over $30 billion at sticker prices.
Shares of IndiGo’s operator InterGlobe Aviation Ltd. surged more than 8% in Mumbai, in line for their best daily advance since early 2016. The stock is still below a record high of 1,898.85 rupees ($26.76) hit on Sept. 30, after slipping through October.
IndiGo’s order for 300 jets from the A320neo family, including the XLR long-range variant, sets it up for a sustained expansion and could help consolidate its lead in India, the world’s fastest-growing major aviation market last year. Asia’s biggest budget carrier by market value has ordered more than 800 Airbus jets in the past 15 years as it embarks on an ambitious overseas expansion.
“IndiGo may be trying to gain beneficial pricing in a difficult sales year,” said George Ferguson, a senior aerospace analyst at Bloomberg Intelligence. That “obscures a poor year for aircraft sales, as airline profits slow in most markets except the U.S.”
IndiGo has specialized in bulk orders since it started operations in 2005, helping it win big discounts and lucrative maintenance deals with Airbus. The airline typically sells aircraft to lessors and then leases back, making a profit in the process and keeping a young fleet that consumes less fuel.
The airline, founded by ex-US Airways Chief Executive Officer Rakesh Gangwal and former travel agent Rahul Bhatia, has quickly outpaced rivals in India. Yet the picture isn’t entirely rosy: IndiGo posted its biggest-ever quarterly loss last week and the two billionaire founders are engaged in a legal battle.
The Indian aviation market has lured the likes of Singapore Airlines Ltd. and AirAsia Bhd. to set up local units. But provincial taxes make the subcontinent one of the most expensive places to buy jet fuel and intense competition has often driven fares below cost, making profits elusive for most airlines.
Shares of IndiGo’s operator InterGlobe Aviation Ltd. surged more than 8% in Mumbai, in line for their best daily advance since early 2016. The stock is still below a record high of 1,898.85 rupees ($26.76) hit on Sept. 30, after slipping through October.
IndiGo’s order for 300 jets from the A320neo family, including the XLR long-range variant, sets it up for a sustained expansion and could help consolidate its lead in India, the world’s fastest-growing major aviation market last year. Asia’s biggest budget carrier by market value has ordered more than 800 Airbus jets in the past 15 years as it embarks on an ambitious overseas expansion.
“IndiGo may be trying to gain beneficial pricing in a difficult sales year,” said George Ferguson, a senior aerospace analyst at Bloomberg Intelligence. That “obscures a poor year for aircraft sales, as airline profits slow in most markets except the U.S.”
IndiGo has specialized in bulk orders since it started operations in 2005, helping it win big discounts and lucrative maintenance deals with Airbus. The airline typically sells aircraft to lessors and then leases back, making a profit in the process and keeping a young fleet that consumes less fuel.
The airline, founded by ex-US Airways Chief Executive Officer Rakesh Gangwal and former travel agent Rahul Bhatia, has quickly outpaced rivals in India. Yet the picture isn’t entirely rosy: IndiGo posted its biggest-ever quarterly loss last week and the two billionaire founders are engaged in a legal battle.
The Indian aviation market has lured the likes of Singapore Airlines Ltd. and AirAsia Bhd. to set up local units. But provincial taxes make the subcontinent one of the most expensive places to buy jet fuel and intense competition has often driven fares below cost, making profits elusive for most airlines.
One subscription. Two world-class reads.
Already subscribed? Log in
Subscribe to read the full story →*Subscribe to Business Standard digital and get complimentary access to The New York Times
Smart Quarterly
₹900
3 Months
₹300/Month
SAVE 25%
Smart Essential
₹2,700
1 Year
₹225/Month
SAVE 46%
*Complimentary New York Times access for the 2nd year will be given after 12 months
Super Saver
₹3,900
2 Years
₹162/Month
Subscribe
Renews automatically, cancel anytime
Here’s what’s included in our digital subscription plans
Exclusive premium stories online
Over 30 premium stories daily, handpicked by our editors
Complimentary Access to The New York Times
News, Games, Cooking, Audio, Wirecutter & The Athletic
Business Standard Epaper
Digital replica of our daily newspaper — with options to read, save, and share
Curated Newsletters
Insights on markets, finance, politics, tech, and more delivered to your inbox
Market Analysis & Investment Insights
In-depth market analysis & insights with access to The Smart Investor
Archives
Repository of articles and publications dating back to 1997
Ad-free Reading
Uninterrupted reading experience with no advertisements
Seamless Access Across All Devices
Access Business Standard across devices — mobile, tablet, or PC, via web or app
SAVE 25%