IndiGo, India's largest airline, has made history with a monumental aircraft order worth $50 billion. The airline has placed an order for 500 Airbus A320 Family planes, marking the largest purchase agreement ever seen in the aviation industry. This exceptional order solidifies IndiGo's dominance in the Indian market and highlights the unprecedented growth potential of the air travel industry in India.

The delivery of these new aircraft is scheduled between 2030 and 2035. Although the order is valued at $50 billion based on list prices, the actual acquisition cost is expected to be substantially lower due to the significant discounts offered for such substantial deals.

The order comprises a combination of A320 neo, A321 neo, and A321 xlr aircraft, offering IndiGo a versatile and modern fleet. The specific engine selection and the exact mix of A320 and A321 aircraft will be determined in due course, as stated by IndiGo in their official statement.

Currently, IndiGo operates a fleet of over 300 aircraft and has additional orders for 480 aircraft that are expected to be delivered by the end of 2030. With this new order of 500 aircraft, IndiGo's order book reaches an astounding total of almost 1,000 aircraft to be delivered in the next decade, solidifying the airline's ambitious growth plans.

The historic purchase agreement was formally signed at the Paris Air Show 2023, attended by key representatives from both IndiGo and Airbus. This milestone agreement was celebrated by Rahul Bhatia, the Promoter & Managing Director of IndiGo, Venkataramani Sumantran, Chairman and Non-Executive Independent Director of IndiGo, Pieter Elbers, CEO of IndiGo, Guillaume Faury, Airbus CEO, and Christian Scherer, Airbus Chief Commercial Officer and Head of International.

IndiGo's CEO, Pieter Elbers, emphasized the significance of this order, stating, "It is difficult to overstate the significance of IndiGo's new historic order for 500 Airbus A320 Family aircraft. An order book now of almost 1,000 aircraft well into the next decade enables IndiGo to fulfill its mission to continue to boost economic growth, social cohesion, and mobility in India."

This landmark order not only strengthens the long-standing partnership between IndiGo and Airbus but also reinforces the commitment to democratizing affordable air travel in India, a market experiencing remarkable growth. Christian Scherer, Airbus Chief Commercial Officer and Head of International, remarked, "This landmark order marks a new chapter in Airbus and IndiGo's relationship that is democratising affordable air travel for millions of people in the world's fastest-growing aviation market."

With an impressive 61 percent share of the domestic Indian market, IndiGo's dominance is set to continue in the foreseeable future. The airline currently operates flights to 26 international destinations and serves 75 international city pairs. IndiGo aims to expand its international seat share from 23 percent to 30 percent within the next two years, further solidifying its position as a key player in the global aviation industry.

With its extensive fleet of over 300 aircraft, IndiGo operates more than 1,800 daily flights connecting 78 domestic destinations. The airline's unrestricted aspiration and ambition reflect the immense growth potential of the Indian air travel market, which is poised to surprise the world. These developments signal India's emergence as an economic powerhouse, with air travel playing a pivotal role in its journey toward fulfilling its true economic potential.

IndiGo shares at Rs 3,000? What analysts say on 500 Airbus A320 aircraft deal

IndiGo, the prominent airline under InterGlobe Aviation, witnessed a remarkable increase in its shares, reaching a fresh high of Rs 3,000. This surge came in response to the airline's recent order placement for 500 Airbus A320 Family aircraft, which is anticipated to ensure a steady stream of deliveries between 2030 and 2035.

The magnitude of this order cannot be understated—it stands not only as IndiGo's largest-ever order but also as the largest single aircraft purchase ever made by an airline in collaboration with Airbus. The precise selection of engines and the composition of A320 and A321 aircraft will be determined in due course.

ICICI Securities, in a note addressed to its clients, lauded IndiGo's fleet management as the bedrock of its success in building a cost-efficient airline operation. This strategic approach to managing aircraft has consistently rewarded IndiGo, allowing them to sustain cycles with the lowest cost structure and cash accretion.

The stock experienced a 2.76 percent increase, reaching a fresh 52-week high of Rs 2,499.95 on the Bombay Stock Exchange (BSE).

The recent order for 500 Airbus A320 family aircraft further bolstered IndiGo's position. The key elements of IndiGo's successful fleet strategy include advanced ordering to ensure continuous capacity growth and associated cashflow benefits, maintaining a low cost structure driven by a uniform and fuel-efficient fleet composition, and continued operations with single aisle aircraft, despite plans to increase the international mix to 30 percent over the next two years and 40 percent by the end of this decade from the current 23 percent in FY23.

ICICI Securities acknowledged IndiGo's consistent approach to aircraft management, which has yielded significant dividends in terms of maintaining the lowest cost structure and cash accumulation. Consequently, ICICI Securities maintained a 'Buy' rating on the stock, with an unchanged target price of Rs 3,000, based on 25 times the FY25E EPS of Rs 120.

Motilal Oswal Securities emphasized that since its inception, IndiGo has ordered a staggering total of 1,330 aircraft from Airbus. The adoption of A320NEO Family aircraft will not only lower IndiGo's operating costs and enhance fuel efficiency but also contribute to its sustainability goals. The company has already achieved a CO2 reduction of 21 percent from FY16 to FY23.

Presently, IndiGo operates a fleet of 304 aircraft, with pending orders for an additional 480 to be delivered between now and the end of the decade. The recent firm order for 500 aircraft scheduled for delivery between 2030 and 2035 brings IndiGo's order book to nearly 1,000 aircraft, extending well into the next decade. The order book comprises a mix of A320NEO, A321NEO, and A321XLR aircraft.

IndiGo expressed its enthusiasm about the profound and extensive strategic relationship between IndiGo and Airbus that this new order would bring. Since its establishment in 2006, IndiGo has solidified its position as a major player in the aviation industry by ordering a staggering total of 1,330 aircraft from Airbus.

Jinesh Joshi, Research Analyst at Prabhudas Lilladher, emphasized that IndiGo's adoption of the fuel-efficient A320NEO Family aircraft will enable the airline to maintain operational cost reduction, fuel efficiency, and sustainability goals. This will undoubtedly support IndiGo's ongoing growth for years to come.

From a technical perspective, Gaurav Bissa, VP at InCred Equities, highlighted IndiGo's recent breakout of the Symmetrical Triangle pattern on the weekly charts, propelling the stock towards the Rs 2,400 level. However, the stock's subsequent trigger of a bearish Harmonic Shark pattern, a reversal pattern, indicates a potential decline to the Rs 2,150 level if the stock closes below Rs 2,350. Nevertheless, the stock's trading position above the major swing high level and the multiyear ascending trendline resistance at Rs 2,550 have preserved buying interest, although Bissa advises existing traders to book partial profits due to the current risk-reward ratio.

Overall, IndiGo's monumental aircraft order has generated excitement and received positive feedback from analysts, who recognize the airline's effective fleet management strategies and the transformative impact of its partnership with Airbus on future growth and sustainability.

References:

Moneycontrol.com
Businesstoday.in