© Reuters. FILE PHOTO: A bird flies over the Air India airline logo at the corporate headquarters in Mumbai, India, October 19, 2021. REUTERS/Francis Mascarenhas
By Aditi Shah and Tim Hepher
BENGALURU/PARIS (Reuters) – Air India unveiled deals on Tuesday for a record 470 Airbus and Boeing (NYSE:) jets, accelerating the revival of a national emblem under new owners Tata Group, as Europe and the United States cheer economic and political deepening. ties to New Delhi.
The tentative deals include 220 Boeing and 250 Airbus planes and eclipse previous records for a single airline as Air India competes with national giant IndiGo to serve what will soon be the world’s largest population.
US President Joe Biden called the agreement “historic”.
The Airbus order includes 210 A320neo narrow-body jets and 40 A350 wide-body jets, which Air India will use to fly “ultra-long routes,” Tata Chairman N Chandrasekaran said.
Boeing will supply 190 737 MAXs, 20 of its 787 Dreamliners and 10 777X mini-jumbos.
Together with another 25 Airbus planes that will be leased to meet immediate needs, the total acquisition reaches 495 planes, an Airbus official said.
Reuters exclusively reported in December that Air India was approaching record orders for aircraft approaching 500 jets.
The airline’s revival under the Tata conglomerate aims to capitalize on India’s growing traveler base and large diaspora across the globe.
New CEO Campbell Wilson is working to revive its reputation as a world-class airline and shed its image as a run-down, late-running operation with an aging fleet and poor service.
Indian Prime Minister Narendra Modi and French President Emmanuel Macron stressed the political and economic importance of a deal involving India’s former flag bearer.
“This important deal shows, along with the deepening of India-France relations, the successes and aspirations of the civil aviation sector in India,” Modi said.
“This achievement shows that Airbus and all its French partners are fully dedicated to developing new areas of dedication with India,” Macron said during a video presentation.
The aviation deal is expected to have industrial spillovers, with Macron vowing that France will work with India in other sectors.
Chandrasekaran said Airbus and Tata were working on larger partnerships, including an ambition to “add commercial aircraft manufacturing at some point in the future.”
Industry sources say India has repeatedly pushed for Airbus to add a final assembly line in the country, matching a plant in northern China, but that the planemaker has so far rejected the idea on financial and industrial grounds.
THE GROWING INFLUENCE OF INDIA
Air India’s order tops American Airlines’ (NASDAQ:) combined deal for 460 Airbus and Boeing jets more than a decade ago.
Even after the expected steep discounts, the deal would be worth tens of billions of dollars at a volatile time for aircraft giants whose planes are back in demand after the pandemic but are facing mounting industrial and environmental pressures.
“It’s important for the industry because given the recent turmoil in the China market, the alternative growth market is India,” said independent aviation adviser Bertrand Grabowski.
“India is also sending a strong political signal that it wants to stay united with the West at a time when it seems ambiguous about Russian sanctions,” said Grabowski, a former banker with extensive experience financing international aviation deals.
The deal includes a major commercial win for engine manufacturer CFM International, a joint venture between General Energy (NYSE:) and France safran (EPA:). It has been selected to power 210 Airbus narrow-body jets ahead of rival Pratt & Whitney, while the largest jets will be powered by GE or Britain’s Rolls-Royce (OTC:).
British Prime Minister Rishi Sunak said the deal between Air India, Airbus and Rolls-Royce would create new jobs.
Air India, with its mascot Maharajah, was once known for its lavishly decorated planes and stellar service, but its reputation waned in the mid-2000s as financial troubles mounted.
The record order is aimed at putting Air India in the league of the world’s great airlines and making it an influential customer for aircraft manufacturers and suppliers at a time when its home market is experiencing a sharp increase in travel after the COVID-19.
It reflects a strategy to regain a solid share of travel between the Indian diaspora and cities like New Delhi and Mumbai, which are currently dominated by foreign rivals like the Emirates.
It will also put Air India in a stronger position to compete with its domestic rival IndiGo, which has a majority share of the Indian market and a strong position in regional flights.
