Air India signs the largest contract in aviation history with Airbus

The flag carrier Air India will invest more than $100 billion in the purchase of new aircraft. The contracts are the largest in history and, from what is known so far, the purchase will include 210 Airbus A320neo and 40 A350s, Reuters reported.

The chairman of the Tata Group, Natarajan Chandrasekaran, the holding company to which Air India belongs, said that the purchase of 250 aircraft from Airbus has been confirmed from the Asian airline. There is already a letter of intent to formalize the acquisition and celebrations in India, of course.

The total number of aircraft is the same as had been published earlier by other news agencies, but not the model.

The French aircraft manufacturer, Airbus, said in an official statement that they are committed to the sale of 140 A320neo and 70 A321neo single-aisle aircraft, 34 A350-100 and 6 A350-900 wide-body aircraft that will “mark a new era in India”, as the new long-range aircraft will debut in the Asian market.

Air India makes history

The executive confirmed the acquisition through a virtual meeting last week in which French President Emmanuel Macron and Indian Prime Minister Narendra Modi also participated.

In the same communication, Natarajan Chandrasekaran indicated that his airline will be looking to buy a whopping 2,000 new aircraft over the next 15 years, a mammoth project for any airline anywhere in the world.

Campbell Wilson, CEO of Air India, has stated that the aircraft manufacturer is a long-standing partner of his airline, and that these new aircraft will go a long way towards fulfilling Vihaan.AI, the airline’s comprehensive transformation and growth project.

This change is mainly based on significantly extending its network, domestically and internationally, and improving its ground and in-flight products to provide a high level of service worldwide.

Wilson concluded by saying that this major acquisition “is the beginning of a new era for both Airbus and Air India”.

Air India, Airbus and a multi-billion dollar deal

There is no certain and official data regarding the amount of money the deal means for Airbus.

One problem is that the firm has not made official price lists public for about five years.

If the value of the A350-100 were assessed at levels similar to those of the A350-800, prices could reach the same as in 2018 and, if no discounts were given, which is rare, we could be talking about a total amount of 34 billion euros.

On the other hand, various media estimate the possible value of the deal at around $16 billion (€14.8 billion) explaining this by the market valuations currently used for the most popular models.

If the calculation is made based on previous values of other deals, in the middle of last year International Airlines Group, the Anglo-Spanish holding company, acquired 14 A320 Neo. The cost per each at that time was close to 122 million euros. Considering that Air India will buy 210 aircraft, the total value would exceed 25 billion euros for this model alone.

In addition, the A350s could cost it around 300 million euros, for which Airbus would charge approximately 12 billion euros more. Thus, the total figure would be around 38 billion euros.

However, if such large orders for aircrafts occur, it is common for airlines to be offered significant discounts.

The French firm’s shares that week closed almost flat on Euronext Paris, the Paris stock exchange, with an advance of 0.34 percent.

Airbus overtakes Boeing with Air India deal

Christian Scherer, Airbus CCO and president of Airbus International, declared that this was “a historic moment” for both companies.

India is close to a total transformation in the international airline industry and they are proud to be able to provide aviation resources for Tata Holding at this new moment in air travel in India.

On the other acquisitions to be made by Air India until the order is completed. From Boeing, the other aircraft manufacturer, Air India would buy 190 737 MAX aircraft, 20 Boeing 787 models and 10 Boeing 777 Xs, according to industry sources.

Contrary to what is known about Airbus, this agreement with the U.S. firm has not been confirmed so far.