Tuesday, May 07, 2019

IndiGo's new plan shows it isn't going to let up on its blistering expansion

IndiGo is in talks with Airbus SE for another large plane order in a sign Asia’s biggest budget carrier has no intention of letting up on a blistering pace of expansion.
The Indian airline, which adds an aircraft to its fleet every week, is in discussions to buy a longer-range version of the European planemaker’s newest narrow-body jet, according to Chief Executive Officer Ronojoy Dutta.
Existing orders will see IndiGo through the next two years, Dutta said in an interview with Bloomberg News Editor-in-Chief John Micklethwait. After that, the carrier is considering adding new planes including Airbus’s long-distance A321neo LR and the yet-to-be-released A321 XLR, he said.
“When we order, we’ll order in bulk for sure,” Dutta said in New Delhi in his first interview since becoming CEO of the airline in January. “I can’t give you a tentative number, but it will be large. We need longer range.”
Though Dutta didn’t specify the size of IndiGo’s next purchase, it’s likely to be a multi-billion-dollar order based on the company’s history. Its smallest order so far was for 100 A320 jets in 2005 worth $6 billion at list prices at the time. Given that the most-basic variant of the A320neo family today carry sticker prices of more than $100 million each, a large order could exceed $10 billion.
Operated by InterGlobe Aviation Ltd., IndiGo is one of the few Indian carriers with enough cash to aggressively expand, and it’s been mapping out a way to build a long-haul, low-cost business to take passengers from places like New Delhi to London. The carrier has managed to consistently make money even as domestic rivals struggle under a fierce fares war and the world’s priciest jet fuel -- partly because it commits to large plane orders to cap costs.
Founded in 2005 by former US Airways CEO Rakesh Gangwal and former travel agent Rahul Bhatia, IndiGo has quickly outpaced all its rivals to grab almost half of the local market, making both founders billionaires. At more than $8.6 billion, the market value of Indigo’s parent is almost double Air France-KLM’s and ahead of Singapore Airlines Ltd., Dutta isn’t satisfied.
07/05/19 Anurag Kotoky/Bloomberg/Economic Times

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