Record Air India deal with Airbus, Boeing may swell to 840 jets


NEW DELHI: Air India Ltd can almost double what already stands to be the biggest aircraft order in commercial aviation history as it tries to emerge from decades of mismanagement and challenge local rivals and international giants like Emirates and Qatar Airways.

In addition to the record order for 470 planes from Airbus SE and Boeing Co announced Tuesday, the carrier has options to buy another 370 jets, chief commercial and transformation officer Nipun Aggarwal wrote in a LinkedIn post late Wednesday. That number hadn’t been disclosed before.

The previous biggest order was a 460-plane deal by American Airlines in 2011.

Air India has also signed long-term engine maintenance deals with CFM International SA, Rolls-Royce Holdings Plc and GE Aerospace Inc, Aggarwal said.

Founded by Tata Group in the 1930s before being taken over by the state and eventually bought by Tata again last year, Air India holds lucrative landing and parking slots at most major airports around the globe.

It can fly non-stop to a range of destinations, bypassing Middle Eastern hubs. The aim is for the blockbuster order to put it among the world’s top carriers.

“This order is also a testament to the tremendous economic potential unleashed by the Air India privatisation,” Aggarwal wrote.

Indian Prime Minister Narendra Modi spoke with both French President Emmanuel Macron and US President Joe Biden when Air India formally signed the deals this week, underscoring the political significance of the order.

Tata’s takeover of Air India was the most high-profile privatisation under Modi’s leadership, during which he has pledged that the government would stay out of businesses and end years of taxpayer-funded bailouts.

Air India and its units currently have more than 200 planes, according to Airfleets.net.

Separately, it was reported that Airbus SE has pushed back targets to ramp up production of its bestselling jetliner, as it continues to grapple with part shortages that already led to lower-than-planned deliveries last year.

The manufacturer now aims to reach a monthly output of its A320-family model of 65 units by the end of 2024, and go to 75 in 2026. Both goals are about a year later than Airbus’ previous projections.

At the same time, the planemaker is increasing production of its bigger widebody jets as long-haul travel returns.

“We are adapting our production to match supply,” Airbus chief executive officer Guillaume Faury said in a statement as the Toulouse, France-based company released full-year earnings.

Airbus is striking a more cautious tone after the company missed an already-reduced delivery target last year. For 2023, the planemaker plans to hand over 720 aircraft, in line with its original 2022 projection, which ended up coming in at 661 planes.

Faury has cautioned that supply constraints will continue to plague the industry at least for the rest of this year, and he called the delivery shortfall last year “quite frustrating.”

The planemaker expects adjusted earnings before interest and tax of €6bil (US$6.3bil or RM28bil) this year, compared with €5.6bil (RM26bil) in 2022. Last year’s cash-flow haul was helped in part by favourable exchange rates, Airbus said.

Analysts at Jefferies called the planned production ramp-up of widebody aircraft “a positive surprise,” while the target for free cash flow for the year is “poor.”

The company, which recently named Thomas Toepfer as new chief financial officer, proposed paying a dividend of €1.80 (RM8.49) for 2022. — Bloomberg

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