IndiGo owner says terms of 250-jet Airbus order have expired

Monday, 13 July 2015 00:00 - - {{hitsCtrl.values.hits}}

Reuters: The owner of Indian airline IndiGo said on Tuesday that the terms of a provisional order to buy 250 aircraft from Airbus had expired, but that the two companies remained in talks about acquiring a ‘significant’ number of A320neo jets.

Budget airline Indigo, India’s biggest carrier by market share, signed a provisional order for 250 A320neo jets from Airbus in October, handing the European planemaker its biggest-ever potential order.

The order was worth nearly $ 26 billion at list prices.

“Although the term sheet has expired we remain in active discussions concerning the potential acquisition of a significant number of aircraft from the A320neo family,” InterGlobe Aviation said in the draft prospectus for its initial public offering, which it filed with Indian regulators on Tuesday.

InterGlobe said there was ‘no assurance’ that it would be able to negotiate a new aircraft order with Airbus.

The chief executive of planemaker Airbus said described the delay as a technical one related to the timing of the IPO.

“I am not worried about this,” Fabrice Bregier told Reuters.

Industry sources have said the deal is expected to be signed before the end of this year.

Founded in 2006 by travel entrepreneur Rahul Bhatia and Rakesh Gangwal, a former chief executive of US Airways, IndiGo has placed a series of aggressive, eye-catching orders for Airbus jets as it tries to win a bigger share of India’s fast-growing aviation market.

Before last October’s provisional order, which industry sources had expected to be completed by the end of this year, the airline had placed firm orders for a total of 280 A320-family jets, of which it has taken delivery of 100.

IndiGo specialises in placing big orders for jets and selling them on to lessors before renting them back to reduce capital costs.

It has denied that the sale-and-leaseback model is the main driver of its profits, which stand out against the chronic losses that have plagued most other major carriers in India.