Airbus signs record $ 50 billion deal with Indigo Partners for 430 aircraft | The independent
Airbus announced the largest commercial aircraft contract in its history, securing an order valued at nearly $ 50 billion (£ 37 billion) for 430 planes on its A320neo single-aisle route.
The deal with US investor Indigo Partners gives Airbus the edge at the Dubai Airshow, where it was beaten by Boeing in the controls. It is also a crowning achievement for Airbus Sales Director John Leahy, who is on the verge of retirement after a decades-long career in which he has secured deals for thousands of aircraft and has placed the European aircraft manufacturer in a position of duopoly with its rival.
For Indigo Partners, led by Bill Franke, the Airbus deal provides modernized narrow-body aircraft to bolster the fleets of low-cost carriers from Denver to Budapest. The planes will go to four companies in Indigo’s investment portfolio: Frontier Airlines, Mexican Volaris, European operator Wizz Air and newcomer JetSmart, which began operating in Chile this year.
The deal includes 273 A320neo jets as well as 157 of the larger A321neo variant and is worth $ 49.5 billion before the usual discounts, Airbus said. Leahy, 67, called the deal “remarkable,” while Franke, 80, who co-founded Indigo in 2002, said it underscored his confidence in the A320 and the low-cost, no-frills travel model. which he helped develop.
Even with Indigo’s massive transport, Airbus may not be able to make it to the Dubai event. Other orders mentioned could still materialize on Wednesday, people familiar with the matter said, including a deal with EgyptAir Airlines for the A320neos and one with low-cost carrier FlyDubai. The latter weighs an order of 175 narrow-body planes that could be split between the A321neo and the Boeing 737 Max.
The Indigo deal more than doubles Airbus’ previous order backlog for the year, which stood at around 290 aircraft as of October 31, pushes the aircraft manufacturer’s backlog above 7,000 jets and reverses expectations that orders will be lower than deliveries in 2017.
The transport will also help Airbus catch up with Boeing in the order count this year, with the European aircraft maker signing 343 contracts at the end of last month, compared to 690 for its Chicago-based rival on November 7. The order also trumps a 2015 deal for 250 single-aisle jets worth $ 27 billion by Indian airline IndiGo. The two companies are not related.
The massive A320 victory ends a possible defeat on the A380 superjumbo, which has so far failed to secure a follow-up deal with local carrier Emirates at the Dubai show. The companies are in talks on a deal for about 36 additional double-decker vehicles valued at $ 15.7 billion, people familiar with the negotiations said.
The A380 has become almost a marginal product for Airbus, with a total order book of 317, more than 100 less than the A320s Indigo plans to buy.
The distribution of the Indigo order is as follows:
- Wizz – 146 aircraft (72 A320neo, 74 A321neo)
- Border – 134 aircraft (100 A320neo, 34 A321neo)
- Volaris – 80 aircraft (46 A320neo, 34 A321neo)
- JetSmart – 70 aircraft (56 A320neo, 14 A321neo)
The purchase gives Airbus chief executive Tom Enders a boost, who has found himself on the defensive amid an investigation into allegations of corruption at the company. Mr. Enders warned employees that the investigation is likely to be a lengthy process that could lead to “serious consequences” and “significant penalties.”
A German who ran Airbus for five years, Mr. Enders orchestrated another coup last month when he struck a deal with Bombardier to take a controlling stake in the Canadian company’s C Series aircraft program. This will give Airbus access to cutting edge technology while at the same time giving Bombardier a lifeline for its low-selling planes.
The A320 is Airbus’ best-selling product and the aircraft that put the company on the map when it was introduced in the late 1980s with cutting-edge technology such as electric flight controls and a joystick side to steer the plane rather than Boeing’s central yoke.
Airbus was the first to launch the new engine variant of its existing unibody model. The A320neo made its first flight in 2014 and has been delivered to customers around the world. Boeing’s response, the 737 Max, only entered commercial service this year.
Narrow-body planes, which can typically accommodate six people abreast in economy class, are the workhorses of the global airline fleet. Growing demand for air travel will bring airliner sales to more than 34,000 globally over the next 20 years, according to Airbus’ 2017 Global Market Forecast. Almost three-quarters of that will be single-aisle models, the company said.
Despite being a huge commercial success, the A320neo has not been without technical flaws. Production is disrupted by manufacturing delays at Pratt & Whitney, a unit of United Technologies Corp, which supplies the aircraft’s turbofan engine. The A320neo is also powered by engines manufactured by CFM International, a company between General Electric and Safran.
Airbus manufactures the A320 Family at various sites around the world, including its main plant in Toulouse, France, as well as Hamburg, Germany. The company also builds the aircraft on an assembly line in China and recently established a presence in the United States with a factory in Mobile, Alabama.