Air India has signed deals with Airbus and Boeing for what could become the largest airliner purchase in commercial aviation history as the carrier looks to reinvent itself with a fuel-efficient fleet capable of taking on local rivals at low cost and powerful Gulf airlines like Emirates.
The airline has agreed the outlines of the deal with the two aircraft and could formally announce the deal as early as next week, according to sources close to the talks, who asked not to be identified because the talks are confidential.
Airbus is securing about 250 orders and commitments in total, consisting of 210 single-aisle A320 Family models and 40 wide-body A350s, the people said. Boeing has secured about 290 possible buys, with 190 737 Max airplanes and the option for 50 more, as well as 20 787 Dreamliners and the same number of possible reloads, along with 10 777x airplanes, the people said.
The final tally could still change due to the deal’s complicated structure, which is composed of firm orders, memorandums of understanding and letters of intent, both of which are less robust than an outright purchase agreement, the people said.
Officials from Airbus, Boeing and Air India declined to comment.
Air India and its parent, Nanny Group, spent months negotiating the massive transaction, which should allow the carrier to improve service and reliability while reducing fuel costs. It is also an attempt by the legendary airline, founded under Tata in the 1930s, to win back traffic from Gulf rivals such as Emirates or Qatar Airways, which have built a business model that transports Indians to the United States and Europe via their huge hubs in Dubai and Doha.
Recovery of China
Carriers around the world have updated and upgraded their fleets to cash in on the rapid recovery in travel after the Covid pandemic. Blocking new aircraft commitments had become an urgent matter for Air India as the supply of newly built airliners became more and more limited.
After China abruptly ended many of its tough coronavirus measures in December and opened its international borders last month, the resumption of travel has only picked up steam. Airlines are ramping up their long-haul capacity, enticed by the prospect of the world’s largest outbound tourism market reopening and betting that demand more broadly will return to pre-pandemic levels in 2023.
Tata bought Air India last year in the most high-profile privatization under Prime Minister Narendra Modi. The transaction ended decades of attempts to offload the loss-making and debt-laden carrier that has survived years of taxpayer bailouts.
Market consolidation
As part of the acquisition, the group is consolidating its aviation business, which includes four airline brands. Tata said last year that it will merge Air India with Vistara, which it jointly holds with Singapore Airlines Ltd. That deal will give Singapore Air a 25.1 percent stake in the combined carrier.
The deal is also a big win for Airbus and Boeing, both of which have local ventures with the Tata Group, India’s largest conglomerate. Manufacturers have benefited from the rise of budget carriers in India placing mega orders in the past few years. In 2019, Airbus closed one of its largest deals ever with the sale of 300 narrowbody aircraft to Indian airline IndiGo, worth more than $33 billion in sticker prices.
While Air India’s latest order further solidifies Airbus’ lead in narrowbody aircraft, it also gives the European manufacturer a major win in the widebody space that has historically been the domain of Boeing.
The airline has agreed the outlines of the deal with the two aircraft and could formally announce the deal as early as next week, according to sources close to the talks, who asked not to be identified because the talks are confidential.
Airbus is securing about 250 orders and commitments in total, consisting of 210 single-aisle A320 Family models and 40 wide-body A350s, the people said. Boeing has secured about 290 possible buys, with 190 737 Max airplanes and the option for 50 more, as well as 20 787 Dreamliners and the same number of possible reloads, along with 10 777x airplanes, the people said.
The final tally could still change due to the deal’s complicated structure, which is composed of firm orders, memorandums of understanding and letters of intent, both of which are less robust than an outright purchase agreement, the people said.
Officials from Airbus, Boeing and Air India declined to comment.
Air India and its parent, Nanny Group, spent months negotiating the massive transaction, which should allow the carrier to improve service and reliability while reducing fuel costs. It is also an attempt by the legendary airline, founded under Tata in the 1930s, to win back traffic from Gulf rivals such as Emirates or Qatar Airways, which have built a business model that transports Indians to the United States and Europe via their huge hubs in Dubai and Doha.
Recovery of China
Carriers around the world have updated and upgraded their fleets to cash in on the rapid recovery in travel after the Covid pandemic. Blocking new aircraft commitments had become an urgent matter for Air India as the supply of newly built airliners became more and more limited.
After China abruptly ended many of its tough coronavirus measures in December and opened its international borders last month, the resumption of travel has only picked up steam. Airlines are ramping up their long-haul capacity, enticed by the prospect of the world’s largest outbound tourism market reopening and betting that demand more broadly will return to pre-pandemic levels in 2023.
Tata bought Air India last year in the most high-profile privatization under Prime Minister Narendra Modi. The transaction ended decades of attempts to offload the loss-making and debt-laden carrier that has survived years of taxpayer bailouts.
Market consolidation
As part of the acquisition, the group is consolidating its aviation business, which includes four airline brands. Tata said last year that it will merge Air India with Vistara, which it jointly holds with Singapore Airlines Ltd. That deal will give Singapore Air a 25.1 percent stake in the combined carrier.
The deal is also a big win for Airbus and Boeing, both of which have local ventures with the Tata Group, India’s largest conglomerate. Manufacturers have benefited from the rise of budget carriers in India placing mega orders in the past few years. In 2019, Airbus closed one of its largest deals ever with the sale of 300 narrowbody aircraft to Indian airline IndiGo, worth more than $33 billion in sticker prices.
While Air India’s latest order further solidifies Airbus’ lead in narrowbody aircraft, it also gives the European manufacturer a major win in the widebody space that has historically been the domain of Boeing.
