Exclusive-Air India nears historic order for 500 jets – sources via Reuters

By Tim Hepper and Aditi Shah

PARIS/NEW DELHI (Reuters) – Air India is close to landing milestone multibillion-dollar orders for 500 jetliners from both Airbus and Boeing (NYSE: ). Industry sources said on Sunday.

The orders include 400 narrow-body jets and 100 or more wide-bodies, including dozens of Airbus A350s and Boeing 787s and 777s, they said on condition of anonymity because the final touches will be put on the massive deal in the coming days. .

Such a deal would rank as the largest by an airline at a list price of more than $100 billion, including any options, topping American Airlines’ (NASDAQ: ) combined order for 460 Airbus and Boeing jets a decade ago. . Even after significant expected discounts, the deal could be worth tens of billions of dollars and it could be a volatile year for airline giants facing mounting industrial and environmental pressures, and a return to demand for jets after the pandemic.

This would allow Airbus to secure a home for some A350 production slots.

Airbus and Boeing declined to comment. Tata Group-owned Air India did not respond to a request for comment.

China took delivery of its first C919 jetliner last week, but experts say it will take at least a decade to compete on such a scale.

The potential blockbuster order comes days after Tata announced the merger of Air India with Vistara, a joint venture with Singapore Airlines (OTC: ), to create a larger full-service carrier and strengthen its presence in domestic and international skies. The deal gives Tata a fleet of 218 aircraft, cementing Air India as the country’s largest international carrier and second largest in the domestic market after flagship IndiGo.

The acquisition of debt-ridden Air India has given Tata access to valuable flying rights and landing slots, particularly to destinations in the US and Europe.

Barriers to growth

Air India’s Maharaja logo was once synonymous with lavishly decorated planes and stellar service, but its reputation declined as financial problems mounted in the mid-2000s. Founded by JRT Tata in 1932, Air India was nationalized in 1953. Tata regained control in January and has since been trying to restore its reputation as a world-class airline.

The order reflects a strategy to recapture a solid share of journeys between cities such as Delhi and Mumbai, dominated by India’s large overseas diaspora and foreign rivals such as Emirates.

Air India wants to win more share of the regional international traffic as well as the domestic market, setting up a battle on both fronts with IndiGo.

Delivered over the next decade, the 500 jets will replace and expand fleets in the world’s fastest-growing air travel market, while contributing to Prime Minister Narendra Modi’s goal of growing the economy to $5 trillion.

But experts warn there are several obstacles to Air India’s ambition to regain a strong global position, including weak domestic infrastructure, a pilot shortage and the threat of stiff competition from established Gulf and other carriers.

The Air India-Vistara tie-up may struggle to quickly order medium-haul Airbus A321neos, with the European planemaker sold out by 2028 or later.

The new Boeing 737 MAXs will most likely go to the company’s budget operator Air India Express, which may be rebranded, an industry source said.

Aircraft and engine makers have been banging on Air India’s door for months, with new chief executive Campbell Wilson refusing to rush a fleet decision.

Reuters reported in July that Air India was taking more time to study Airbus A350s and Boeing’s wide-body 787 and 777 models.

Last month, Campbell confirmed talks of a “massive expansion” of Air India’s fleet over the next five years, saying the “investment will be substantial, if total undervaluation.”