$2.5 billion Airbus agreement

Indian Airlines has signed a term sheet agreeing to buy 43 Airbus planes worth $2.5 billion. This will be Indian’s first purchase in 15 years, replacing a fleet which includes 25 year old Boeing 737s.

The state-run carrier’s order is for aircraft from Airbus’ A320 family: 19 A319s, four A320s and 20 A321s. All 43 aircraft will feature two-class cabin layouts and will be powered by CFM engines.

The negotiations have been underway since 2003 and were finalised after Airbus offered to reduce the price by $75 million.

Indian Airlines Chairman and Managing Director Sushma Chawla says, “Our challenge is to modernise and grow while delivering a world class service.”

Dr. Kiran Rao, Airbus Senior Vice President, says, “This commitment rejuvenates a partnership between Airbus and Indian Airlines that began over 30 years ago, and which is now set to continue into the future.”

The final Purchase Agreement is expected to be signed in February, 2006. Delivery of the aircraft will take place between October 2006 and March 2010.