IndiGo to buy 180 Airbus aircraft for $15 billion (Roundup)

NEW DELHI - Indian low-cost carrier (LCC) IndiGo Wednesday signed a $15 billion deal with European aircraft manufacturer Airbus for buying 180 A320 aircraft, the biggest ever single firm order for large jets in global aviation history.

“IndiGo has signed a memorandum of understanding for 180 eco-efficient Airbus A320 aircraft, of which 150 will be the neo option and 30 will be standard A320s,” a company statement said.

“The order is the largest ever for a single-aisle aircraft which is a large aircraft type,” a senior company official told IANS, adding that the company was mulling options on how to finance the deal.

While analysts believe that the order confirmed the fact that the Indian aviation scenario has grown by leaps and bounds over the years, and that financing such a major deal wont be a hassle for the company.

“The banks or other institution wont find it hard to finance such a deal because the company is very mature and has grow over the last 2-3 years. Another fact to consider is that the deliveries would happen over time,” said Amber Dubey, director, aerospace and defense at KPMG.

According to him, some of the aircrafts can also be deployed by the company to fly abroad, as the LCC is going to get the required clearances to operate out of India.

What makes the deal truly historic is the fact that this is the largest order ever placed by an Indian carrier for large-bodied passenger jets.

The behemoth order placed by the Gurgaon-based LCC follows a 2005 order for 100 A320s placed by the company during the Paris airshow.

While the last major deal in Indian aviation was struck in 2006 when state-run Indian Airlines and Air India, before their merger into National Aviation Company of India, had together ordered 111 planes from Boeing and Airbus Industries.

Apart from IndiGo, Kingfisher Airlines in 2005 placed an order for 30 Airbus A320 aircraft at the Dubai Air Show in a deal valued at $1.9 billion.

According to Boeing, India would require 1,150 commercial aircraft worth $130 billion over the next two decades. Currently 11 scheduled passenger airlines in the country have 419 aircrafts.

Meanwhile, IndiGo would be one of the first carriers in the world to operate the eco-friendly and cost efficient version of A320 known as ‘neo’.

The company feels that the order of the newer version of the jet aircraft would translate into cost savings and better operating margins.

“This order for leading fuel efficient aircraft will allow IndiGo to continue to offer low fares,” said Rahul Bhatia, group managing director of InterGlobe Enterprises.

Bhatia said that the decision to purchase A320s was based on the opportunities to reduce costs and improve environmental performance.

Airbus A320neo is a short-to-medium range, narrow-body, commercial jetliner which can accommodate up to 220 passengers and has a range of 3,100 to 12,000 km.

The aircraft are expected to be delivered between 2016 and 2025, while the selection of the engine type would be decided later by the airline.

The airline’s new aircraft will feature more efficient engines and large wing tip devices called sharklets, delivering significant fuel savings of up to 15 percent.

The A320 family of aircraft are used for widespread service around the globe, including segments like short commuter sectors in Europe, Asia, while in the US the aircraft is used for trans-continental flights.

Currently, IndiGo, which is the third largest domestic airline as per market share, operates 34 Airbus A320-200 airplanes with total seating capacity of 180 people each to connect 24 cities within India with 221 daily flights.