Airbus wins accord from India’s IndiGo for 250 A320neo jets
By Bloomberg
Airbus Group NV signed an initial agreement with India's IndiGo for 250 A320neo single-aisle airliners, in what will be the planemaker's largest order by number of aircraft as travel demand in the country grows.
The agreement follows orders by the Indian discount carrier for 280 aircraft from the A320 family that included both the version with the existing engines and the more fuel-efficient neo variant, Airbus said in a statement today. While Airbus didn't provide a value of the latest accord, the A320neo has a list price of about $102.8 million, giving the entire transaction a value of $25.7 billion, not including discounts.
"This new order reaffirms IndiGo's commitment to the long- term development of affordable air transportation in India and overseas," IndiGo President Aditya Ghosh said in the statement. IndiGo is India's biggest carrier by market share.
Airbus has turned the A320neo into the fastest-selling airliner in commercial aviation history as customers clamor for savings on fuel, which can make up as much of 40 percent of their entire cost. Earlier this month, Airbus signed an accord with China for 70 A320 aircraft. In total, the A320 family has won almost 11,000 orders to date.
Airbus gained as much as 79 cents, or 1.7 percent, to 46.7 euros in Paris. The stock has lost 18 percent this year, putting it on path for its worst annual return since 2008.
Indian Demand
IndiGo and local competitors are ordering more aircraft as economic growth in the world's second-most populous nation boosts demand for air travel. While IndiGo talked to Boeing Co., Airbus's main competitor, the New Delhi-based carrier's preference was to buy Airbus planes, people familiar with the airline's discussions said in July.
Economic growth across Asia is lifting orders for Airbus and Boeing, with China forecast to supplant the U.S. as the world's largest market by 2032, the European planemaker has forecast. An American makes 1.8 flights per year, a German makes one flight annually while people from China and India make a relatively low 0.2 and 0.1 flights, Airbus said last year.
India will require 1,290 new aircraft valued at $190 billion in 20 years to 2032 to meet the travel demand in the country, the European planemaker said in March.
Asian Demand
In January 2011, IndiGo ordered 180 planes worth $15 billion from Airbus, at the time the biggest order in commercial aviation history, as it builds toward a goal of eventually reaching a 1,000-jet fleet. IndiGo is owned by InterGlobe Enterprises Ltd. that has its origins in a travel company founded by Kapil Bhatia in 1964. IndiGo began service in 2006, a year after placing a $6 billion order for 100 Airbus A320 planes.
Besides IndiGo's purchases, some of Airbus's largest orders for single-aisle A320s have come from Asia. AirAsia Bhd., the region's biggest budget airline, unveiled an order for 100 A320 jets in December 2012, following on an order for 200 A320neo aircraft valued at $18 billion a year before.
PT Lion Mentari Airlines, Indonesia's biggest airline,. placed an order for 234 A320s in March 2013.
Last week, IndiGo agreed to sublease 12 aircraft from Singapore-based budget airline Tiger Airways Holdings Ltd.