Mega deal expected with Boeing
Air India makes a bulk purchase from Airbus
2/14/2023, 4:22 p.m
After almost 70 years, India released its state airline into independence last year. The company now intends to significantly expand its fleet of aircraft. A total of almost 500 machines are on the shopping list. The company is now entering into an initial agreement with Airbus.
The airline Air India wants to buy 250 jets from Airbus. The company has signed a letter of intent for 210 machines from the A320neo medium-haul jet family and 40 A350 wide-body aircraft, said the head of Air India’s parent Tata Group, Natarajan Chandrasekaran, at an online briefing with Indian Prime Minister Narendra Modi and France President Emmanuel Macron. A purchase price was not mentioned, the catalog price (as of 2018) is more than 36 billion dollars. But it is almost never paid.
According to US President Joe Biden, Air India has also agreed to purchase a total of 220 aircraft with Boeing: 190 medium-haul 737 Max aircraft and 30 long-haul jets, divided into 20 787s and 10 of the larger 777Xs. The order is worth $34 billion at list prices. However, large customers receive discounts that are not published. There are also options for 70 more Boeing aircraft, bringing the total to 290.
Airbus expects large market growth
With the bulk purchase, Air India wants to renew its fleet with more economical machines and benefit from the recovery of air traffic from the Corona crisis. “The time is ripe to make India an international hub,” said Airbus boss Guillaume Faury. Airbus expects passengers in the Indian market to increase from 165 million in 2019 to 641 million in 2041. Air India wants to win back passengers from Arab carriers Emirates and Qatar Airways. These have been transporting passengers from India to the USA and Europe for years – via their hubs in Dubai and Doha.
Tata and Air India say they have been negotiating with Airbus for two years. According to Tata boss Chandrasekaran, Air India has secured options with Airbus to significantly expand the order. Especially with the jets from the A320neo family, Airbus is fully booked for years. Anyone who orders a model from this family today will have to wait until 2029 for delivery, sales manager Christian Scherer said in January.
State privatized Air India for $2.4 billion
Air India was privatized last year. The company currently flies with 115 machines. She hasn’t bought any new machines since 2006. It was nationalized in 1953 and always received financial support from the Indian government. In January 2022, the government sold the airline to Tata Group, a conglomerate with products ranging from tea to steel, for $2.4 billion. Tata is now preparing to renew the fleet.
Air India has a market share of just 8.7 per cent in the domestic air travel market, with low-cost carrier IndiGo alone accounting for 56 per cent. For international flights, Air India is still number one in the country. Airline boss Campbell Wilson wants to increase the market share for domestic flights to 30 percent in the next five years.
The European manufacturer Airbus, like other companies, is struggling with bottlenecks among suppliers and workers. Important parts are always missing. In the past year, management had to cut its target for aircraft deliveries twice. Airbus plans to publish its annual financial figures on Thursday. At this appointment, the management usually also names its goals for the new year – including a forecast of how many machines the manufacturer will deliver.