IndiGo prepares another ‘large’ Airbus order

By BLOOMBERG

NEW DELHI • IndiGo is in talks with Airbus SE for another large plane order in a sign Asia’s biggest budget carrier has no intention of letting up on a blistering pace of expansion.

The Indian airline, which adds an aircraft to its fleet every week, is in discussions to buy a longer-range version of the European planemaker’s newest narrow-body jet, according to CEO Ronojoy Dutta (picture).

Existing orders will see IndiGo through the next two years, Dutta said in an interview with Bloomberg News editor-in-chief John Micklethwait.

After that, the carrier is considering adding new planes including Airbus’ long-distance A321neo LR and the yet-to-be-released A321 XLR, he said.

“When we order, we’ll order in bulk for sure,” Dutta said in New Delhi in his first interview since becoming CEO of the airline in January.

“I can’t give you a tentative number, but it will be large. We need longer range.”

Though Dutta didn’t specify the size of IndiGo’s next purchase, it’s likely to be a multibillion-dollar order based on the company’s history.

Its smallest order so far was for 100 A320 jets in 2005 worth US$6 billion (RM24.9 billion) at list prices at the time.

Given that the most-basic variant of the A320neo family today carry sticker prices of more than US$100 million each, a large order could exceed US$10 billion.

Founded in 2005 by former US Airways CEO Rakesh Gangwal and former travel agent Rahul Bhatia, IndiGo has quickly outpaced all its rivals to grab almost half of the local market, making both founders billionaires.

At more than US$8.6 billion, the market value of Indigo’s parent is almost double Air France-KLM’s and ahead of Singapore Airlines Ltd, yet Dutta isn’t satisfied.

“There are a lot of airlines ahead of us,” he said. “We would like to be one of the biggest, largest and profitable airlines in the world.”

IndiGo shares rose as much as 1.7%, before paring all gains to trade 0.2% down at 1,558 rupees at 10:48am in Mumbai yesterday. They have gained about 33% in the past 12 months.

“One of the things that’s key to our success is keeping the fleet cost down, and fleet cost is only down when you order in bulk,” Dutta said.

While IndiGo has so far confined past orders to Airbus, it hasn’t ruled out buying Boeing Co jets in the future, according to Dutta.

And the order being discussed with Airbus hasn’t been finalised.

“We are negotiating right now for an engine order,” Dutta said.

“We are negotiating with everybody. We don’t have a fixed agenda. We’ll go this way or that way, whatever makes sense.” — Bloomberg