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Airbus to sell 430 planes to Indigo for USD 49.5 billion

The Airbus deal with Indigo Partners will see 273 A320neos and 157 A321neos split up among Denver-based Frontier, JetSMART of Chile, Volaris of Mexico and Wizz Air of Hungary, all ultra-low-cost airlines associated with Indigo.

Reported by: AP , Dubai [ Published on: November 15, 2017 15:43 IST ]
Airbus to sell 430 planes to Indigo for USD 49.5 billion
Airbus to sell 430 planes to Indigo for USD 49.5 billion

Airbus signed a $49.5 billion deal on Wednesday to sell 430 airplanes to the Phoenix-based private equity firm that owns Frontier Airlines, striking the European aerospace company’s biggest deal ever at the Dubai Air Show.

Meanwhile, Boeing reached an agreement with low-cost carrier FlyDubai to sell 225 Boeing 737 MAX 10 aircraft — a deal valued at $27 billion. The developments came ahead of the biennial air show closing on Thursday.

The Airbus deal with Indigo Partners will see 273 A320neos and 157 A321neos split up among Denver-based Frontier, JetSMART of Chile, Volaris of Mexico and Wizz Air of Hungary, all ultra-low-cost airlines associated with Indigo.

The surprise announcement comes after Airbus on Sunday suffered the embarrassment of believing it had struck a major deal with the state-owned carrier Emirates to sell its A380 double-decker jumbo jet, only to see Boeing sit on the podium with the airline and sign a $15.1 billion deal.

“Just to clarify: This is not an A380 press conference,” joked John Leahy, Airbus’ sales chief, as the start of the announcement.

A320neos list for $108.4 million apiece and A321neos at $127 million. Airlines and manufacturers negotiate lower prices for big deals like these, something Indigo’s managing partner Bill Franke was quick to stress afterward speaking to journalists.

“Here’s hoping,” he said. “Their objective is to sell aircraft at the best possible and our objective is to buy aircraft at the best possible price. I’ve known Mr. Leahy for 25 years. Sometimes he wins, sometimes I win.”

Asked if he won, Franke said: “That’ll be a good question.”

Airbus’ previous biggest-ever sale came in August 2015, when it sold 250 A320neos to Indian budget airline IndiGo, a deal estimated to be worth $26 billion at list prices. IndiGo and Indigo Partners are separate firms with separate management.

Franke is a pioneer of the cheap tickets and high fees airline business that has spread overseas and is growing in the United States. Such carriers offer low base fares but adds fees to stow a carry-on bag, get an assigned seat and other extras. That’s led to soaring customer complaints against Frontier.

Franke was previously the chairman and chief executive of America West, which was acquired by U.S. Airways in 2005.

President Donald Trump also came up in Franke’s conversation with journalists on Thursday, as Franke said the American leader would be happy to know the A321neos purchased by Indigo would undergo final assembly in the Airbus plant in Mobile, Alabama.

Shortly after, FlyDubai and Boeing announced their $27 billion deal. FlyDubai said the planes would bring the low-cost carriers total fleet up to 320. FlyDubai has begun to code-share flights with Emirates; both airlines are owned by Dubai’s government.

Until Wednesday, the only major deal announced at the Dubai Air Show came on Sunday, when long-haul carrier Emirates purchased 40 Boeing 787-10 Dreamliners in a $15.1 billion deal.

Airbus, which is based in Toulouse, France, has pinned hopes of continuing production of its A380 double-decker jumbo jet on Emirates, the world’s largest operator of the aircraft. Reports circulated before the air show that a major A380 sale would be coming.

Airbus employees even filled a news conference on Sunday, expecting the A380 sale, instead to find state-owned Emirates making the deal with Boeing in front of Dubai’s ruler, Sheikh Mohammed bin Rashid Al Maktoum.

Emirates now relies solely on the Airbus 380 and the Boeing 777 for its flights, making it the largest operator of both. It has 165 Boeing 777s in its fleet today and took possession of its 100th A380 earlier this month.

The Emirates’ snub even came up at the news conference Wednesday, when a reporter asked Airbus if another deal could be coming.

“I think you’ve got to walk over to the chalet with Emirates on the door and ask them,” Airbus’ Leahy said.

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