According to Bloomberg, Tata-owned Air India is considering acquiring over 300 narrowbody planes, which may become one of the most important purchases in commercial aviation history, as the airline prepares to expand its fleet under new management. An unidentified source stated that Air India may acquire Airbus SE’s A320neo family planes, Boeing Co.’s 737 Max models, or a combination of both. Despite the fact that reductions are common during such huge acquisitions, a contract for 300 737 Max-10 planes may be worth $40.5 billion.
Because Airbus controls the skies in India, Boeing obtaining a narrowbody contract will be a huge victory for the manufacturer. Prior to the pandemic, airlines such as IndiGo, operated by InterGlobe Aviation Ltd, were the world’s largest customers for Airbus’ best-selling narrowbodies, ordering over 700, alongside others such as Vistara, Go Airlines India Ltd., and AirAsia India Ltd. who fly planes from the same European manufacturer.
Three hundred planes will take years, if not decades, to manufacture and deliver. Airbus produces around 50 aircraft per month, with plans to boost production to 65 per month by 2023, and subsequently to 75 per month by 2025. Although Air India and Boeing spokespeople declined to comment on the topic, an Airbus spokesman told Bloomberg that the business is always in communication with existing and future clients, but their conversations are kept private.
Satyendra Pandey, the general partner of aviation advice firm AT-TV, was reported by Bloomberg as saying, ‘This order obviously entails new means of finance to play out properly, including taking into account macroeconomic factors, particularly the changing rupee and growing inflation. Some airlines have made large orders only to discover that they are unable to secure acceptable financing. While that is not the desired conclusion, especially with a family like the Tatas, it must be anticipated’, Pandey noted.
Bloomberg News previously reported that Air India’s parent company, Tata Group, is in advanced negotiations with Airbus about ordering A350 long-range planes capable of traveling as far as the US West Coast from New Delhi. Although Air India still has profitable landing places in the country, the airline confronts stiff competition from foreign competitors offering nonstop routes to India as well as carriers flying via Middle Eastern hubs.
Tata’s purchase of Air India earlier this year was one of the most high-profile privatizations under the Modi government. Tata is projected to combine its aviation companies, which justifies such a significant purchase of new planes, allowing it to decrease costs and compete more effectively with rivals offering cheap fares.