Military
Airbus Confirms Largest Ever Order: $50 Billion
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At the Dubai Air Show in November, Airbus firmed up the largest order in its history. Private equity firm Indigo Partners ordered 430 new passenger aircraft at a total list price value of $49.5 billion. The aircraft, all single-aisle A320neos, are destined for four carriers in four different countries.
The company had signed a memorandum of understanding with Indigo Partners in early November. The four airlines involved in the transaction are U.S. carrier Frontier Airlines, Hungary’s Wizz Air, Chile’s JetSmart and Mexico’s Volaris.
The order comprises 274 A320neos and 156 A321neos and add to the four carriers previously placed orders for a total of 427 A320 family aircraft. Engines for the aircraft have not been selected yet.
Retiring Airbus COO for customers, John Leahy, said:
[Indigo’s managing partner] Bill Franke and the teams from Wizz, Volaris, JetSMART and Frontier are great partners, and the global Airbus team is very proud to continue to meet their growing needs for aircraft that provide value, reliability and comfort. The A320neo family offers the lowest operating costs, longest range and most spacious cabin in the single-aisle aircraft market, making the ‘NEO’ a great choice for these low-cost airlines in the Americas and Europe.
Here is how the order breaks down:
- Frontier: 100 A320neo and 34 A321neo
- Wizz: 72 A320neo and 74 A321neo
- JetSmart: 56 A320neo and 14 A321neo
- Volaris: 46 A320neo and 34 A321neo
The final value of the order could reflect a discount of as much as 60% from the list price, but Leahy pointed out a few days ago, “Those airlines got a good deal but so did Airbus.” The firm order means that the company’s assembly line is virtually guaranteed to run at full capacity for 10 more years, lowering production costs and raising cash flow.
At the beginning of the year Airbus projected new orders of around 400, well below the 700 planes the company plans to deliver this year. This single order brings the company’s order total for the year to 705, but that is still well short of the 844 new orders booked by Boeing Co. (NYSE: BA) as of last week.
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