Air India Ltd. ordered 470 jets from Boeing Co. BA 1.30% and Airbus EADSY 0.87% SE, marking the largest commercial aircraft deal in aviation history and comes as airlines scramble for jets to meet rising demand for air travel.
The airline said it had agreed to buy 250 Airbus jets and 220 Boeing planes, beating a 2011 deal for 460 American Airlines planes. The deal aims to provide more aircraft to serve India, which is expected to be the fastest growing major aviation market in the world.
Boeing orders, based on the aircraft’s list prices, totaled $45.9 billion, including options. Airbus no longer quotes list prices for its jets. According to analysts’ estimates, the total value of the transaction before deducting rebates was approximately $85 billion. The previous record — an order for Boeing 777X jets from Emirates in 2013 — was valued at about $75 billion. Airlines do not typically pay a list price, instead benefiting from large undisclosed discounts.
The Boeing order was first announced by the White House, while the Airbus deal was unveiled by Indian Prime Minister Narendra Modi and French President Emmanuel Macron at a joint press conference. President Biden later discussed the deal with Mr Modi, the White House said.
Airbus, bolstered by the deal with Air India, plans to ramp up production rates of its two largest models to capitalize on resurgent demand for long-haul travel, The Wall Street Journal reported separately. Boeing has postponed planned production increases due to supplier shortages but still hopes to increase production this year.
The airline industry almost went into hibernation during the pandemic, only to be unable to cope with all the customers clamoring for seats after travel restrictions were eased.
Airlines and airports have had to hire more staff as they struggled through a turbulent summer of long queues, delays, cancellations and lost luggage. At the same time, airlines have rushed to new jets, straining Airbus and Boeing assembly lines.
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Both aircraft manufacturers increased their delivery figures in 2022 compared to the previous year. Airbus handed over 661 aircraft to customers, up 8%, while Boeing increased deliveries by 41% to 480 commercial aircraft.
It was the fourth consecutive year that Airbus delivered more aircraft, a streak that followed after decades of Boeing leading the commercial aircraft market. Airbus steadily increased market share, and Boeing was turned on its head after the two crashes of its 737 MAX jets, which plunged the company into the biggest crisis in its history.
In its statement announcing the deal, the White House broke down Boeing’s order: 190 of Boeing’s 737 MAX jets; 20 787 Dreamliner; and 10 of its 777X aircraft. The deal includes options for 50 MAX jets and 20 Dreamliners.
Airbus’ order was for 210 narrow-body A320s and 40 of the aircraft manufacturer’s largest production airliner, the wide-body A350.
Air India was privatized last year and has a fleet of around 100 jets, most of them leased. While both aircraft manufacturers received a broadly equal share of the order, this marked the first time Airbus had joined Air India’s widebody fleet. Airbus Chief Commercial Officer Christian Scherer has touted the large-capacity component as a coup.
“That’s not a foot in the door,” said Herr Scherer. “It’s our whole body in the door at Air India.”
The first batch of Air India A350s will arrive later this year, Mr Scherer said. These models were originally intended for the Russian Aeroflot-Russian Airlines PJSC before the start of the war in Ukraine and sanctions against aircraft sales.
Boeing gave no details on when deliveries of its planes would begin and said the order has yet to be completed.
Airbus plans to increase the so-called build rate for its two widebody aircraft currently in production, the A350 and A330neo, according to people familiar with the matter. An announcement could come as soon as this week, people said, warning that a decision is still pending.
Airbus and Boeing throttled jet production early in the pandemic, as travel restrictions and border closures brought international traffic to a near halt, prompting airlines to cancel and postpone plane orders.
Boeing shares rose 1.3% on Tuesday, while Airbus shares gained 0.3% in Paris trading.
Air India, owned by India’s Tata Group, has been negotiating its twin deals with Airbus and Boeing for months to secure delivery dates from both companies. The airline wants to regain some of the lost traffic – particularly to its Gulf rivals, including Qatar Airways and Emirates, which have dominated routes carrying Indian passengers around the globe.
Boeing has forecast that India will be the fastest growing aviation market in the world over the next two decades, with the country’s airlines expanding rapidly to meet rising demand. The aircraft manufacturer expects India to need around 2,210 new aircraft over the next 20 years. This is mostly driven by demand for smaller aircraft to serve a domestic market that Boeing is forecast to double by the end of the decade.
Indian airlines have expanded internationally and reduced travel times with the help of their continued operations through Russian airspace. Chinese airlines also continue to fly through Russia. Airlines from many other countries grounded their flights following the invasion of Ukraine last year.
Air India was acquired by Tata for about $2.4 billion in January 2022, ending a decades-long government struggle to sack the unprofitable company. The deal returned Air India to its original owners after its inception as Tata Airlines in 1932. It was nationalized in 1953 and suffered heavy losses in 2007 after a merger with a rival state airline, Indian Airlines.
Write to Benjamin Katz at [email protected] and to Doug Cameron at [email protected]
Corrections & Enhancements
Air India was privatized by Tata in January 2022 for approximately $2.4 billion. A previous version of this article incorrectly stated that it was privatized in 2021. (Corrected on February 14)
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