July 11, 2018 / 5:57 AM / 9 days ago

India's Vistara orders Boeing, Airbus jets worth $3.1 billion in growth plan

NEW DELHI/SINGAPORE (Reuters) - Indian airline Vistara has placed firm orders for six Boeing Co (BA.N) 787 jets and 13 Airbus SE (AIR.PA) A320neos valued at $3.1 billion at list prices, as it looks to add more domestic flights and launch international routes later this year.

A Vistara Airbus A320 passenger aircraft prepares for takeoff at Chhatrapati Shivaji International airport in Mumbai, India, July 11, 2018. REUTERS/Francis Mascarenhas

The order for Boeing’s 787s marks a new setback for Airbus in an intense battle for widebody orders as the European planemaker seeks to strengthen the order book for its upgraded A330neo passenger jet.

Boeing posted figures on Tuesday showing a significant lead in new orders over its European rival, buoyed by demand for the 787 following a series of showdowns against the A330neo.

Airbus said last week it saw good demand for the upgraded jet and is expected to announce orders soon. The Farnborough Airshow, which typically attracts large numbers of airline orders, will be held in Britain next week.

A Vistara Airbus A320 passenger aircraft prepares to land at Chhatrapati Shivaji International airport in Mumbai, India, July 11, 2018. REUTERS/Francis Mascarenhas

Vistara joins rival Jet Airways (JET.NS) and low-cost carriers IndiGo and SpiceJet (SPJT.BO) that have plans to grow their international operations to offset a highly competitive, price-sensitive domestic market.

“India’s position as the world’s fastest growing domestic aviation market and its impressive growth in air passenger traffic that has more than doubled over the last decade makes us confident of our aggressive plans for domestic expansion and international foray,” Vistara CEO Leslie Thng said in a statement on Wednesday.

The joint venture between India’s Tata Sons Ltd and Singapore Airlines Ltd (SIAL.SI), said it would procure another 37 A320neos from leasing companies and also had purchase rights over 4 more 787-9s and options over 7 more A320neos.

The purchased and leased Airbus jets, fitted with CFM International LEAP engines, will be delivered between 2019 and 2023. The Boeing jets, to be powered by GE (GE.N) engines and used for medium and long-haul flights, are expected in 2020 and 2021.

INTERNATIONAL TRAVEL

There is huge potential for international travel from India, where the domestic aviation market has grown about 20 percent annually in recent years.

Only 0.3 percent of the 1.3 billion population currently travel abroad for a holiday every year, a fraction of the estimated 100 million Indians who could potentially afford to do so, according to an analysis of household income by aviation consultancy CAPA.

CAPA expects Vistara to place another large widebody order within the next 1-2 years and also expects InterGlobe Aviation’s (INGL.NS) IndiGo to pursue an “aggressive international strategy” by soon announcing a large order.

“India will see closer to 100 wide-body orders in next 1-2 years indicating a strong international strategy,” said Kapil Kaul, CEO and director for South Asia at CAPA.

Jet Airways placed a firm order in June for 75 Boeing 737 MAX aircraft, taking the total to 225 new aircraft which it expects to add to its fleet over the next decade.

Reporting by Aditi Shah in New Delhi and Jamie Freed in Singapore, Additional reporting by Euan Rocha in Mumbai and Tim Hepher in Paris; Editing by Himani Sarkar and Muralikumar Anantharaman

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