August 17, 2015 / 8:09 AM / 2 years ago

India's IndiGo finalizes $26.5 billion purchase of 250 new Airbus jets

NEW DELHI/SINGAPORE (Reuters) - IndiGo, India’s biggest airline by market share, has finalised the purchase of 250 Airbus (AIR.PA) A320neo aircraft, handing the European company its largest-ever order by number of planes in a deal worth $26.55 billion at list prices.

Passengers disembark from an IndiGo Airlines A320 aircraft at Bengaluru International Airport in Bangalore March 7, 2012. REUTERS/Vivek Prakash

The agreement confirms an earlier provisional order by IndiGo for the 250 narrow-body planes announced in October. Budget airline IndiGo has now ordered 530 A320 family planes in all from Airbus, the planemaker said in a statement on Monday.

The latest deal helps extend Airbus’s lead against arch-rival Boeing (BA.N) in orders for the fast-growing upgraded narrow-body aircraft segment.

IndiGo would start taking delivery of the new Airbus planes from 2018 until 2026, the airline’s president, Aditya Ghosh, told Reuters. As with previous orders, Indigo will perform sale and leaseback transactions on the majority of the aircraft bought from Airbus, he said.

The deal makes IndiGo the largest airline customer for the Airbus A320-family of aircraft. Other large A320 customers include low-cost carriers such as Malaysia’s AirAsia (AIRA.KL) and Indonesia’s Lion Air.

It is also the second-largest order by value for Airbus.

The A320neo is the re-engined and upgraded variant of the A320 family of planes and competes against Boeing’s upgraded 737 Max in the narrow-body market segment.

Boeing has projected that narrow-body aircraft, which are used on flights of up to around five hours, will account for 70 percent of all planes required over the next 20 years.

Boeing has secured 2,831 orders for its 737 Max plane, according to data on its website, while Airbus said that it has over 4,100 orders for the A320neo with this order.

Founded in 2006 by travel entrepreneur Rahul Bhatia and Rakesh Gangwal, a former chief executive of U.S. Airways, IndiGo has placed a series of aggressive orders for Airbus jets as it tries to win a bigger share of India’s fast-growing aviation market.

India’s air travel market is forecast by the International Air Transport Association to become the third-largest around 2031 as millions start flying for the first time.

IndiGo flies one in three of India’s air travelers. Its owner, InterGlobe Aviation, filed in June a draft prospectus for an initial public offering. It had said in the prospectus that the terms of the 250 aircraft order had expired, raising concerns about the deal.

Additional reporting by Leila Abboud in PARIS; Editing by Andrew Callus and Muralikumar Anantharaman

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