Business

IndiGo and Airbus in record-breaking jet deal

An Indigo Airbus A320 about to land
Image caption IndiGo will get the first delivery in 2015, after it procures all 100 planes from a previous order

Indian budget airline IndiGo has signed a deal to buy 180 Airbus aircraft.

The agreement is thought to be the biggest single order in commercial aviation history.

Shares in European aerospace group EADS, which makes the Airbus, rose almost 4% on Wednesday after the $15.6bn (12bn euro; £13bn) deal was announced.

IndiGo is now considering its options on how to raise the necessary capital to purchase the aircraft.

Financial options

The order consists of 150 A320neo's and 30 A320s, making IndiGo a launch customer for the more fuel-efficient A320neo, while the choice of engine will be announced at a later date.

IndiGo is jointly-owned by Rakesh Gangwal, a former US Airways executive, and InterGlobe Industries.

After less than five years, it has become the third-largest domestic carrier in India.

The company is now considering its financial options, including an initial public offering (IPO) to finance the deal with Airbus.

"You can't run a business without considering various options, with this IPO being one of them, but it's too early for me to comment," Indigo executive Aditya Ghosh told the Reuters news agency.

Growing market

From September 2011, IndiGo intends to start international flights to the Middle East and South-east Asia.

"There is a fundamental demand for air travel and more so for low-fare air travel," Mr Ghosh said.

"If we take a longer term view, we definitely see passenger traffic and demand increasing," he added.

IndiGo's main rival, SpiceJet, agreed to purchase 30 Nextgen aircraft from Canada's Bombardier for $915m in November 2010.

India has only 400 commercial planes, whereas China, with a comparable population, has 2,600 aircraft.

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