IndiGo is the world’s largest customer for aircraft in the A320neo family.
IndiGo, India’s largest airline, is in talks with Pratt & Whitney and CFM International Inc. for its next batch of jet engine orders, according to people familiar with the matter, a rare sign of deals in an industry that has been paralyzed by the virus pandemic. .
The discussions with rival manufacturers relate to engines that would power around 150 new Airbus SE A320neo jets, said the people, who asked not to be named because the negotiations are private. The talks are preliminary and there is no timeline for when a deal can be reached, the people said.
Based on the size of IndiGo’s last engine order, a $ 20 billion transaction with CFM that covered 280 aircraft and was the largest engine order in history, the new deal could be worth around $ 10, 7 billion, including service, repair and maintenance. However, the pandemic presents a unique opportunity for IndiGo to potentially negotiate with engine manufacturers, who now count as suppliers.
“This is the perfect time to get involved given the general market conditions and the status of the competitors, which will allow Indigo to win very lucrative deals,” said Satyendra Pandey, New Delhi-based partner at AT-TV and former head of Go Airlines India strategy. “As this selection is for all other aircraft, it implies long-term performance and cost forecasts.”
Representatives for IndiGo and CFM declined to comment. Pratt & Whitney did not immediately respond to a request for comment.
Operated by InterGlobe Aviation Ltd., IndiGo is the world’s largest customer for A320neo family aircraft, with up to 730 orders. The airline has yet to decide the type of engine for the 300 that would be outstanding.
Rich in cash
That any airline is negotiating on future aircraft and related parties comes as a surprise considering how deeply the global aviation industry has been demoralized by the pandemic. India had the world’s fastest growing aviation market for several years before demand began to waver and Covid-19 closed borders and decreased international travel.
IndiGo, although affected by border closures and international travel shortages like other airlines, is relatively wealthy, with around $ 2.4 billion in cash and equivalents as of September 30. Total debt as of that date was $ 3.5 billion.
Although Pratt, which is owned by Raytheon Technologies Corp, has spent $ 10 billion to develop a new engine for narrow-body aircraft, it has faced delivery delays and multiple problems that have caused mid-air stops. IndiGo decided last year to sideline its engines, placing a $ 20 billion order in its place with rival CFM, a venture between General Electric Co. and France’s Safran SA.
Airlines around the world have postponed or canceled hundreds of aircraft orders as demand plummets. Any significant recovery is considered years from now, and a viable vaccine remains elusive. That has forced both Airbus and its US rival Boeing Co. to cut production and thousands of jobs, in turn putting pressure on hundreds of suppliers.
IndiGo plans to cut its fleet size over the next two years, accepting new deliveries and returning older aircraft at an even faster rate, before starting to grow again by 2023, CEO Ronojoy Dutta told analysts during a conference call. post-earnings phone call last week. . Unlike other operators, IndiGo has not participated in any “major renegotiations” with Airbus on new deliveries, Dutta said.
(Updates with the CFM’s response in the fifth paragraph).
(Except for the headline, this story has not been edited by NDTV staff and is posted from a syndicated channel.)
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