Airbus Secures Deal for 430 Jetliners -- Update

By Doug Cameron 

Airbus SE secured one of the largest aircraft deals in history with a 430-jet agreement with airlines linked to Indigo Partners LLC, a U.S. private equity group with stakes in some of the fastest-growing low-cost carriers on three continents.

The proposed deal, announced Wednesday at the Dubai Airshow, carried a sticker price of almost $49.5 billion before the customary discounts that can reduce the true value by 50% or more, though consolidation in the airline and finance industries is giving buyers more clout.

Airbus said the commitment was its largest-ever aircraft deal, lifting the Indigo group above AirAsia and India's unrelated IndiGo as its biggest customer by list price.

Indigo, based in Phoenix, is led by industry veteran Bill Franke, who has invested in a number of carriers including holdings in Frontier Airlines in the U.S., Hungary's Wizz Air Holdings PLC and Mexico's Volaris. It also backed JetSmart, a new Chile-based carrier that launched this year.

The preliminary agreement covers 430 planes -- 73 A320neos and 157 of the larger A321neo model -- doubling the potential orders from the four Indigo-family of airlines.

Denver-based Frontier plans to take 134 jets, with Budapest-based Wizz receiving 146 planes. Volaris would receive 80, with 70 for startup JetSmart.

The European manufacturer has trailed rival Boeing Co. in securing new orders this year, garnering over 300 before Wednesday's announcement compared with more than 600 for its U.S. rival.

It is unusual for airlines to order aircraft jointly, though Dubai's Emirates Airline and Qatar Airways cooperated as launch customers for the Boeing 777X at the Dubai airshow in 2013.

Indigo didn't disclose when first deliveries were due to start, or what engines they would choose. The Pratt & Whitney unit of United Technologies and a joint venture between General Electric Co. and Safran SA offer rival engines.

Airbus and Boeing both have backlogs for their single-aisle jets stretching five or more years, even though both are boosting output.

Deals of this scale have become more commonplace in recent years, thanks in part to the explosive growth of low-cost carriers.

However, analysts are cautious on whether some of the big customers will take all of their planned jets on schedule, particularly if an economic downturn slows traffic growth. Plane makers can boost profits by agreeing to defer aircraft deliveries.

Gus Kelly, chief executive of aircraft lessor AerCap Holdings NV, this week noted that the highlight of some airline CEO's careers was when they placed an aircraft order. Speaking at an investor conference, Mr. Kelly said that some of these orders had served only to benefit the shareholders of Airbus and Boeing.

Write to Doug Cameron at [e-mail]

(END) Dow Jones Newswires

November 15, 2017 03:16 ET (08:16 GMT)

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