Mammoth Air India fleet renewal not done yet?

by ASSOCIATE EDITOR AND CHIEF CORRESPONDENT, TOM BALLANTYNE  

February 1st 2023

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Air India’s massive order for 470 aircraft – 250 from Airbus and 220 from Boeing – may be just the beginning of the carrier’s buying spree with reports it has many more new jets under option, particularly with Airbus. Read More » Boeing’s order, announced by U.S. President Joe Biden at press time, was a commitment for 220 aircraft and 70 options. Airbus has remained silent when asked if it had options for aircraft beyond the firm 250 order.

At the European plane maker’s annual press conference, CEO Guillaume Faury was asked if Air India and Airbus had agreed to options of as many as 300 aircraft. Faury said he would not comment on options, and said only Air India had made “a sizeable order already”.

The resurgent airline group’s huge commitment for new jets did not surprise the market or industry media. It had been rumoured for weeks. At list prices, the orders have a staggering value of US$68 billion, aviation consultancy, IBA, has calculated. However, the Tata Group airline company will not be paying anything like that amount. Given the size of the Airbus and Boeing orders, the now privatized carrier will have negotiated deals at a significant discount.

From Airbus, the India flag carrier has ordered 140 A320neo, 70 A321neo, 34 A350-1000 and 6 A350-900 aircraft, with the first delivery of the A350-900 anticipated late this year.

Boeing’s order is 190 B737 MAX 8, 20 B787-9 and 10 B777X, making Air India the 11th customer for the B777X. The 70 options are 50 MAXs and 20 B787-9s.

IBA airline analyst, Neil Fraser, said “there had been rumours of a major order for some time. Its confirmation affirms Air India’s growth focus as it completes its merger with Vistara”.

“Air India dominates India’s international operations, with capacity twice that of its largest competitor, LCC IndiGo, in 2022,” Fraser said.

With this order containing such a significant number of narrow-bodies, IBA is speculating the new Air India may be going after IndiGo’s domestic market share.

“The domestic market has not been a major focus for Air India, whose flights have been a fifth of those operated by IndiGo,” Fraser said.

Two days after the huge orders were announced, Airbus reported its results for fiscal year 2022 of pre-tax profits of $5.7 billion on revenue of $62.9 billion. It delivered 661 commercial aircraft in the 12 months, short of its goal of 700 deliveries.

Gross annual commercial aircraft orders were 1,078, but this figure was reduced to 820 planes after cancellations. The order backlog was 7,239 commercial aircraft at the end of 2022, Airbus said.

At the results conference, Faury said assuming there are no additional disruptions to the world economy, air traffic, the supply chain, the company’s internal operations and its ability to provide products and services, Airbus aims to deliver 720 aircraft in 2023 and achieve a pre-tax profit of $6.4 billion for the year.