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In one of its biggest deals, Airbus bags $30-bn IndiGo order for 300 jets

The deal marks the latest victory for Airbus as rival Boeing reels from the idling of its 737 Max after two fatal crashes in five months

Anurag Kotoky | Bloomberg 

Airbus

Airbus won one of its biggest-ever contracts with a deal for 300 jets from Indian budget carrier IndiGo that’s worth more than $30 billion at sticker prices.

The order for the A320neo narrow-body planes includes the latest XLR long-range variant and takes IndiGo’s order book for the family to 730 aircraft, it said in a statement Tuesday.

The deal marks the latest victory for Airbus as rival Boeing reels from the idling of its 737 Max after two fatal crashes in five months. Boeing chief Dennis Muilenburg is due to appear before US lawmakers Tuesday amid mounting pressure from his board, regulators and airlines.

For IndiGo, the purchase will help widen its lead in the world’s fastest-growing major aviation market as it embarks on an ambitious expansion plan, seeking to eventually connect cities such as London with India.

Founded in 2005 by ex-US Airways Chief Executive Officer Rakesh Gangwal and former travel agent Rahul Bhatia, IndiGo has quickly outpaced all its rivals to grab almost half of the local market, making both founders billionaires.

In an interview earlier this year, CEO Ronojoy Dutta flagged that the airline was preparing to make another large order. Its smallest order so far was for 100 A320 jets in 2005 worth $6 billion at list prices at the time.

Boeing has sold only a handful of its Max planes since the entire fleet was idled in March, costing the company $9.2 billion and counting. An anonymous customer ordered a business-jet version in September, while an outline deal from British Airways owner Consolidated Airlines Group SA for 200 aircraft has yet to be signed off.

Airbus’s new A321 XLR has extended the range of the A320neo family to 4,700 nautical miles, so that buying the model would allow IndiGo to offer narrow-body flights between city pairs that can’t support larger jets.

The XLR also overlaps with the market Boeing would target with its long-planned New Midmarket Airplane or NMA. A decision on whether to move forward with that program has been put on hold as the company focuses on the Max crisis.

The Indian aviation market has lured the likes of Singapore Airlines and AirAsia to set up local units. But provincial taxes make the subcontinent one of the most expensive places on Earth to buy jet fuel and intense competition has often driven fares below cost, making profits elusive for most airlines.

The A320 family is a class of single-aisle workhorse planes that outsell all other types of aircraft from Airbus, and usually for Boeing. The latest A320neo -- for which IndiGo is the already the top customer -- is equipped with new engines to reduce fuel burn and was priced at $110.6 million as of 2018, though discounts are common. The XLR has a list price of $142 million.

First Published: Tue, October 29 2019. 21:55 IST
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