Airbus wins a lucrative deal of 500-plane order from IndiGo

On the first day of the Paris Airshow, Europe’s Airbus scored a historic contract involving the most jets ever purchased by a single airline, with an order for 500 narrowbody jets from Indian budget carrier IndiGo. The multibillion-dollar contract dwarfs Air India’s earlier acquisition of 470 planes, as India’s two largest carriers prepare for a surge in regional travel demand.

IndiGo’s order for A320neo-family planes comes after months of talks. A 500-plane agreement was close, according to industry sources ahead of the Le Bourget exhibition.

The planes are scheduled to be delivered between 2030 and 2035. Efforts by Indian carriers to keep up with the world’s fastest-growing aviation sector, which serves the most people, have sent industry records sliding, despite manufacturers’ struggles to reach output targets.

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According to a June 1 study by Barclays, Indian carriers now have the second-largest order book, accounting for more than 6% of the industry backlog, trailing only the United States. However, other analysts are concerned that airlines may be purchasing too many planes to accommodate the same people.

Following the signing of the IndiGo agreement, Airbus CEO Guillaume Faury stated that it was premature to consider increasing narrowbody aircraft production rates above the projected 75 per month.

Airbus has had challenges in restarting manufacturing following the epidemic, pushing back the mid-decade objective to 2026, but Faury said supply interruption was a relatively short-term issue compared to delivery timetables beginning next decade.

Analysts believe IndiGo will have negotiated the choice to convert to any new model or cancel late deliveries rather than being leapfrogged because Airbus has stated that it is considering developing a successor to the A320neo between 2035 and 2040.

IndiGo, which accounts for roughly 60% of the Indian domestic market, is sticking with Airbus as its single-aisle jet provider in order to maximise economies of scale. However, it has not yet decided which engine provider would be used for the most recent order. Following engine durability difficulties, it transferred from Pratt & Whitney (RTX.N) to GE-Safran (GE.N)(SAF.PA) joint venture CFM International roughly four years ago.

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