IndiGo is the world‘s largest customer for the A320neo Family jets.
IndiGo, India’s largest airline, is in talks with Pratt & Whitney and CFM International Inc. for its next batch of jet engine orders, people familiar with the matter say, a rare sign of negotiation in an industry crippled by the virus pandemic.
Discussions with rival manufacturers are about engines that would power around 150 new Airbus SE A320neo jets, the people said, asking not to be identified as the negotiations are private. Discussions are preliminary and there is no timeline on when a deal can be reached, the people said.
Based on the size of IndiGo’s latest engine order – a $ 20 billion deal 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. The pandemic, however, presents a unique opportunity for IndiGo to potentially negotiate with engine manufacturers, who now both count as suppliers.
“This is a great time to get involved given the general market conditions and the state of the competitors – which will allow Indigo to secure some very lucrative deals,” said Satyendra Pandey, partner at AT-TV based in New Delhi and former Chief Strategy Officer of Go Airlines India. “As this selection concerns the remaining aircraft, it involves 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 of A320neo Family jets, with up to 730 on order. The airline has yet to decide what type of engine the 300 would be exceptional.
Rich in silver
The fact that an airline is negotiating on future planes and related parts is a surprise given how demoralized the global aviation industry has been by the pandemic. India had the world‘s fastest growing aviation market for several years before demand began to weaken and Covid-19 closed borders and curtailed international travel.
IndiGo, although affected by border closures and the shortage of international travel like other airlines, is relatively wealthy, with around $ 2.4 billion in cash and cash equivalents as of September 30. Total debt at that time 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 jets, it has faced delivery delays and multiple issues leading to in-flight shutdowns. . IndiGo decided last year to give up its engines, placing a $ 20 billion order with rival CFM, a company between General Electric Co. and Safran SA.
Airlines around the world have postponed or canceled hundreds of aircraft orders as demand plummeted. Any significant recovery is seen years away, and a viable vaccine remains elusive. This forced Airbus and its American rival Boeing Co. to cut production and thousands of jobs, in turn putting pressure on hundreds of suppliers.
IndiGo plans to reduce the size of its fleet over the next two years, taking new deliveries and returning older jets at an even faster rate, before starting to grow again by 2023, CEO Ronojoy said. Dutta to analysts in a post-earnings conference call last week. . Unlike other carriers, IndiGo has not entered into any “major renegotiations” with Airbus on new deliveries, Dutta said.
(Updates with CFM’s response to the fifth paragraph.)
(Except for the title, this story was not edited by GalacticGaming staff and is posted from a syndicated feed.)
