x Abu Dhabi, UAESaturday 25 November 2017

Airbus bags largest deal to date with $49.5 billion order from Indigo for 430 A320neo jets

The US-based holding company will feed the single-aisle aircraft into its four low-cost airlines

Bill Franke's Indigo Partners will feed 430 Airbus A320neo aircraft into the company's four low-cost carriers. AFP / Airbus
Bill Franke's Indigo Partners will feed 430 Airbus A320neo aircraft into the company's four low-cost carriers. AFP / Airbus

Airbus, the world's second-largest aerospace company, signed a preliminary order with US-based private equity firm Indigo Partners for its biggest deal yet that includes 430 A320neo single-aisle jets worth US$49.5 billion at list price before discount.

"This marks the culmination of months of work with the Airbus team," said Bill Franke, managing director of Indigo partners.

The deal "underscores our optimistic view of the growth potential of our family of low-cost airlines as well as our confidence in the A320neo family as a platform for that growth."

The deal is one of the largest in aviation history and the biggest for Airbus, which had been lagging behind rival Boeing at the industry expo Dubai Airshow this week.

The Toulouse-based manufacturer has not been able to convince Emirates, as yet, to buy more A380 superjumbos. The Dubai carrier wants a commitment from Airbus, which has not sold any A380s in more than two years, that ensures the viability of the double-decker for the next decade and a half.

"This is a memorandum of understanding that's being signed today. We are hopeful it will become a firm order in the coming weeks," said veteran Airbus sales chief John Leahy, who is to retire from the company. The deal would provide a fitting end to the career of Airbus’s top salesman who has helped the aircraft manufacturer reap $1.7 trillion in orders.

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The last sizeable order for Airbus was in July, when the plane-maker signed a $23bn deal to sell 100 A320 aircraft to state-owned China Aviation Supplies Holding Company, to allocate to Chinese airlines.

In 2015, Airbus landed its biggest single order for airliners when it agreed to sell 250 A320neos to Indian carrier IndiGo in a deal worth $26.6bn at list prices. The A320 is the most successful model of Airbus, one that competes with Boeing's 737.

Under the deal on Wednesday, Airbus will sell its bestselling upgraded single-aisle jets to Indigo Partners' low-cost carriers that include Wizz Air (Hungary), Frontier Airlines (United States), JetSMART (Chile) and Volaris (Mexico), to increase their fleets. The carriers will begin taking delivery of the aircraft between 2022 and 2026.

The deal more than doubles Airbus’ order book for the year.

Emirates, the world’s largest operator of wide-body aircraft, is still in discussions with Airbus to buy additional A380s, Sheikh Ahmed bin Saeed Al Maktoum, chairman and chief executive of the airline, said on Tuesday.

An order of 20 jets would be valued at US$8.7 billion, while an order for 36 of the aircraft would be worth $15.7bn at list prices before discount.

The deal with Airbus takes Indigo Partner's orders with the plane manufacturer to more than 900 aircraft.

"As an owner you look at fuel burn, seat cost, and we are satisfied Airbus meets those requirements," said Mr Franke.

The 430-committment comprises 273 A320neos, and 157 A321 neos.