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Air India closes in on record-breaking order for up to 500 jets

Air India is close to ordering up to 500 planes worth tens of billions of dollars from both Airbus and Boeing as it aims for an ambitious renaissance under the Tata group, industry sources said on Sunday. 

The orders include up to 400 narrow-body jets and 100 or more wide-body planes, including dozens of Airbus A350s and Boeing 787s and 777s, they said, speaking on condition of anonymity because the giant futures deal is pending.

Such a deal could exceed $100 billion at list prices, including all options, and be one of the largest by volume for a single airline, aside from a combined order of 460 Airbus and Boeing jets from American Airlines more than ten years ago.

Even after significant expected discounts, the deal would be worth tens of billions of dollars and cap a volatile year for the aviation giants, whose planes have rebounded in demand since the pandemic but face growing industrial and environmental pressures.

It would also allow Airbus to secure a home for some A350 production slots originally reserved for Russia’s Aeroflot, now left open due to war-related sanctions against Moscow.
Airbus (AIR.PA) and Boeing declined to comment. Tata Group-owned Air India did not respond to a request for comment.
China received its first C919 jet last week, but experts say it is at least a decade away from competing at this scale.
The potential blockbuster comes days after Tata said it will merge Air India and Singapore Airlines in a joint venture with Vistara to create a larger full-service airline and strengthen its presence in domestic and international airspace.
The deal will give Tata a fleet of 218 aircraft, making Air India the country’s largest international airline and the country’s second-largest domestic airline after IndiGo (INGL.NS).

air inida mascot

 

The purchase of debt-laden Air India also gave Tata Airlines access to better flights and landing times, especially in the US and Europe.
Obstacles to growth
Air India’s Maharaja mascot was once synonymous with lavishly decorated planes and excellent service, but its reputation declined in the mid-2000s as financial problems mounted.
Founded in 1932 by JRD Tata, Air India was nationalized in 1953. Tata regained control in January and has since been trying to revive its image as a world-class airline. The order reflects a strategy to regain some share of travel between India’s large overseas diaspora and cities such as Delhi and Mumbai, which are dominated by foreign rivals such as the Emirates.
Air India also wants to win a bigger share of the regional international traffic and the domestic market and start a battle with IndiGo on both fronts.
The 500 aircraft to be delivered over the next decade will replace and expand fleets in the world’s fastest-growing air travel market while advancing Prime Minister Narendra Modi’s goal of growing the economy to $5 trillion.
However, experts warn that Air India’s efforts to regain a strong global position face many obstacles, including weak domestic infrastructure, a pilot shortage, and the threat of intense competition from the Gulf and other carriers. 

Ordering Medium-haul Airbus A321neos for the Air India-Vistara link may also be difficult as soon as desired, as the European plane maker is sold out until 2028 or later.
An industry source said the new Boeing 737 MAX planes are likely to go to the company’s low-cost airline, Air India Express, which may be renamed. 
For months, insiders from aircraft and engine manufacturers have been pounding on Air India’s door because its new CEO, Campbell Wilson, has refused to rush a fleet decision.
Reuters reported in July that Air India had spent more time exploring the Airbus A350 and Boeing’s wide-body 787 and 777 models, in addition to a likely mixed order for smaller single-aisle aircraft.
Last month, Campbell confirmed conversations to “expand” Air India’s fleet over the next five years, saying: “At the risk of a significant understatement, the investment is significant.”

Source:Reuters

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