Airbus Wins 300-Jet Order From Asian Discount Carrier IndiGo
The Airbus-IndiGo deal is worth more than $30 billion at sticker prices.
(Bloomberg) -- Airbus SE landed one of its biggest-ever deals with the sale of 300 narrow-body planes to Indian budget carrier IndiGo that’s worth more than $33 billion at sticker prices.
The contract for A320neo-series jets includes the latest XLR long-range variant and takes IndiGo’s orders for the re-engined aircraft to 730, the companies said in a statement Tuesday. That’s equivalent to more than 10% of all sales of the model, part of a class of workhorse plane that far outsells all other types.
The transaction marks the latest victory for Airbus as Boeing Co. reels from the grounding of the rival 737 Max after two fatal crashes in five months. Boeing chief Dennis Muilenburg is due to appear before U.S. lawmakers Tuesday amid mounting pressure from his board, regulators and airlines.
Airbus Chief Executive Officer Guillaume Faury said the order represented a “strong vote of confidence” in the A320neo from a company that’s already its largest operator, with 97 in service.
For IndiGo, the purchase will widen its lead in the world’s fastest-growing major aviation market as the carrier embarks on an ambitious expansion plan, seeking to eventually provide flights to cities such as London.
Outpaced
Founded in 2005 by ex-US Airways Chief Executive Officer Rakesh Gangwal and former travel agent Rahul Bhatia, IndiGo has quickly outpaced rivals to grab almost half of the local market, making both billionaires.
The company initially bought 100 original-generation A320s before going on to order the upgraded Neo in batches of 180 and 250 aircraft. CEO Ronojoy Dutta revealed earlier this year that it was preparing another large purchase.
Boeing has made only a handful of Max sales since the fleet was idled in March at a cost of $9.2 billion and counting. An anonymous client ordered a business-jet version in September, while a 200-aircraft deal from British Airways owner International Consolidated Airlines Group SA has yet to be signed off.
Airbus’s new A321 XLR -- with a list price of $142 million -- has extended the range of the A320neo family to 4,700 nautical mile. Buying it will allow IndiGo to offer narrow-body flights between city pairs that can’t support larger jets.
The XLR also overlaps with Boeing’s long-planned New Midmarket Airplane or NMA. A decision on whether to move forward with that program has been put on hold as the U.S. company focuses on the Max crisis. Indigo said it’s also purchasing the baseline A320neo, priced at $110.6 million as of 2018, and the A321neo, without providing a breakdown between the variants.
The company will select an engine for the planes later. Its most recent turbine order saw a switch to the Leap model from General Electric Co. and France’s Safran SA following a series of glitches with a rival unit developed by Pratt & Whitney. Indian regulators have warned that planes with Pratt’s geared-turbofan design could be grounded if they’re not updated within two weeks.
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.
Reuters reported earlier on the order.
--With assistance from Will Davies.
To contact the reporter on this story: Anurag Kotoky in New Delhi at akotoky@bloomberg.net
To contact the editors responsible for this story: Young-Sam Cho at ycho2@bloomberg.net, Christopher Jasper, John Bowker
©2019 Bloomberg L.P.