Indigo gives Airbus a monster of an order

Low-cost carrier (LCC) IndiGo created aviation history on Wednesday by ordering 180 Airbus A-320s with a list price of almost $16 billion (Rs 72,000 crore). The planes are to be delivered between 2016 and 2025. It is the single largest order ever in terms of number of aircraft ordered by an airline globally at one go. The delivery will begin after the 100 A-320s worth $6 billion ordered by IndiGo in 2005—the highest by a start-up airline globally, a record that still stands—join the LCC’s fleet by 2015. IndiGo president Aditya Ghosh described the new order as “looking beyond 2015 based on the huge Indian potential” and a “drop in the ocean as far as the country’s requirement goes”. “This order for industryleading fuel efficient aircraft will allow IndiGo to continue to offer low fares. The opportunity to reduce costs and further improve our environmental performance through the A-320 neos was key to our decision,” a joint statement of the airline’s founders said. Airbus, however, was ecstatic. Shares of the plane manufacturer’s parent company EADS touched a three-year high as Airbus India chief Kiran Rao termed it the “beginning of the second wave of orders from India after 2005”. Last year, India’s second largest LCC SpiceJet had placed orders for 30 Boeing 737s and 15 Bombardier turboprops. Other airlines are also expected to place orders this year, signalling the return of good times for Indian skies. It also means that the country’s current commercial aircraft fleet of 400 could double in just a few years. The unlisted and privately-held IndiGo did not disclose its plans on funding the order, only saying that it had “72 months to work on that”, amid talk of an IPO for some time now. But industry analysts like the head of the Centre for Asia Pacific Aviation Kapil Kaul feel that raising funds will not be a problem for a lean and efficient airline like IndiGo (it posted profits of Rs 82 crore in 2008-09 and Rs 550 crore in 2009-10). “They have a number of options like IPO and private equity to fund the 15% required for the fleet acquisition as the balance 85% will be funded through international agencies. Sale and lease back is also an option IndiGo has used successfully so far,” Kaul said. IndiGo, which last month became India’s third largest airline in terms of passenger carriage, currently has 34 aircraft in its fleet, with 14 more slated to join this year. It has so far got 39 of the 100 planes ordered earlier and has returned five to Airbus. The LCC will fly abroad from August after completing five years in the business, and has plans to have an aggressive launch with flights to West Asia, South and Southeast Asia. For Airbus, IndiGo has become the launch customer for the next generation A-320 neo. The new version of A-320 will start joining commercial service by 2016 and is touted to be 15% more fuel efficient, apart from being low on emissions and noise. It will have large wing tip (winglets) called Sharklets that make it a thrifty plane.

No comments: