Air India’s attempt to reinvent itself under its new owners has resulted in the signing of a jumbo deal for approximately 500 new planes worth more than $100 billion at list prices. This could become the single largest order placed by any airline.
The deal, which is equally divided between rival planemaker Boeing (BA.N) and French company Airbus (AIR.PA), was first reported in December and could finally be announced as early as next week, according to sources.
Air India has agreed to acquire 220 Boeing aircraft, including 190 737 MAX narrowbody jets, 20 787 widebodies, and 10 777Xs, as well as 250 Airbus aircraft, which will be split between 210 single-aisle A320neos and 40 widebody A350s.
According to sources, while Airbus and Air India signed the agreement on Friday, Boeing agreed to a deal with the airline on January 27, one year after Tata regained ownership of the former state-run airline.
On January 27, the airline informed its staff that it was “finalizing a historic order for new aircraft.”
The order is a reflection of Air India’s strategy to modernize its aging fleet and reclaim a significant portion of travel between India’s large overseas diaspora and cities like Delhi and Mumbai, which are primarily dominated by Gulf rivals like Emirates with their young aircraft.
Air India will also be able to gain a larger share of regional international traffic and the domestic market as a result of the deal for 400 narrowbodies, putting it in competition with IndiGo on both fronts.
The sources did not rule out a provision by Air India for additional leases or acquisitions at a later time, even though the Airbus number is slightly lower than the 275 that was initially anticipated.
When the final orders arrived, it was not immediately clear to what extent the agreement’s numbers included options that could alter the total.
At a time when Air India’s home market is experiencing a strong post-COVID-19 travel surge, the record order aims to place Air India in the ranks of large global airlines and make it an influential customer for aircraft manufacturers and suppliers.
Air India, with its maharajah mascot, was once well-known for its exquisitely decorated aircraft and excellent customer service. However, as financial difficulties worsened in the middle of the 2000s, its reputation began to deteriorate.
The airline is attempting to reestablish its status as a storied carrier with impeccable service and world-class aircraft under its new ownership.