Transport

Airbus lands biggest deal in its history, with $50bn budget-airline order

European planemaker to sell 430 A320neos to Bill Franke’s Indigo Partners

A320neo: Indigo plans to supply the narrowbody jets to four airlines in which it has stakes: Frontier Airlines, Mexico’s Volaris, the Chilean carrier JetSmart and Hungary’s Wizz Air
A320neo: Indigo plans to supply the narrowbody jets to four airlines in which it has stakes: Frontier Airlines, Mexico’s Volaris, the Chilean carrier JetSmart and Hungary’s Wizz Air
Wed Nov 15 2017 - 07:08

Airbus landed its biggest airliner deal on Wednesday with an agreement to sell 430 planes, worth up to $50 billion, or €42 billion, to the US budget-airline investor Bill Franke.

The preliminary deal for the A320neo narrowbody jets, signed at the Dubai Airshow, offers a major boost to Airbus, which has lagged behind its arch-rival, Boeing, in deals this year. It also ensures that the company's veteran sales chief, John Leahy, retires on a high in the coming months.

But Boeing immediately hit back with a provisional agreement to sell 175 planes to the budget airline flydubai. Including options to buy a further 50 planes, that deal could be worth $27 billion, or €22 billion, at list prices.

The deal between Airbus and Mr Franke’s Indigo Partners is the industry’s largest ever by number of aircraft.

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Indigo plans to supply the A320neo narrowbody jets to four airlines in which it has stakes: Frontier Airlines, Mexico's Volaris, the Chilean carrier JetSmart and Hungary's Wizz Air.

Airbus said it expected to finalise the transaction with the 80-year-old businessman in the coming weeks.

A320neo: Bill Franke of Indigo Partners LLC and John Leahy of Airbus shake on their preliminary deal in Dubai
A320neo: Bill Franke of Indigo Partners LLC and John Leahy of Airbus shake on their preliminary deal in Dubai

Mr Franke is betting the aviation industry is evolving towards the model in Europe, where bare-bones carriers like Wizz Air and Ryanair have made greater inroads in taking market share from legacy airlines on short flights than in the United States. Mr Franke said the idea was to make air travel affordable enough so that it could attract people who wanted to avoid a longer journey on a bus or train.

The agreement, along with flydubai’s deal for Boeing’s 737 Max narrowbody jets, underscores the way budget carriers are rewriting the industry rule book by combining bargain fares with optional services and upgrades for which passengers pay extra.

According to some delegates at the air show, the deals also suggest airlines are taking advantage of a recent slowdown in demand for new jets to negotiate competitive prices.

Airbus’s share of the order tally this year had dropped to 35 per cent before the Dubai show, as a rejuvenated Boeing management made advances in Singapore and elsewhere.

Airbus management, meanwhile, is dealing with investigations by British, French and US authorities after the company uncovered inaccuracies in sales documents. – Reuters