In record deal, IndiGo Airlines buys 250 planes for $25.5 billion

New delhi: IndiGo, India's largest domestic airline, on Wednesday ordered 250 Airbus A320neos worth $25.5 billion (almost Rs 1.5 lakh crore), making it the largest-ever purchase of single-aisle planes in one go. The low-cost carrier (LCC) also got purchase rights for another 100 A320neos with this order, which it can choose to exercise in coming years.

The order of these fuel-efficient planes comes on top of the 100 A320s and 180 A320neos IndiGo had ordered in 2005 and 2011 respectively. Each of the order was a record-breaker in its time. In all, the eight-year-old profitable LCC has placed orders for 530 A320s worth $48 billion with an option for 100 more planes worth $10.2 billion.

The mega aircraft order comes on the back of months of preparations to have funding options and now makes it almost certain that the airline will come out with an IPO. Merchant bankers are working on the impending IPO that is expected early next year.

The A320neo incorporates boasts of latest generation engines and large sharklet wing-tip devices, which together lead to 15% fuel savings.

"Jet fuel accounts for almost half of our operating cost. Lower fuel cost will translate into lower costs for us and lower fares for passengers. More planes mean more connectivity, enhanced frequency and allow us to have a young fleet that offers a quality which brings flyers back to us again and again," said Aditya Ghosh, president of IndiGo, India's fastest growing airline.

The 250 aircraft ordered on Wednesday will join IndiGo's fleet between 2018 and 2026. The airline, which will get its first A320 neo next year, will adopt a mix of owned and sale-and-lease-back (sell them and then rent them) models for acquiring these planes.

Of its 530 orders from IndiGo, Airbus has so far delivered 99 aircraft. The airline currently has a fleet of 83 planes and has phased out 16 planes that were over six year old or among the first in its fleet.

IndiGo had recently got its co-founder Rakesh Gangwal's 48% FDI holding converted to NRI holding to clear up the 49% limit of foreign holding allowed in Indian carriers. Last month, it has signed an agreement with Industrial & Commercial Bank of China to finance 30 A320s.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.