Daily Management Review

Airbus Inks $4.4 billion order with Virgin Atlantic and Close to Striking Deal with GoAir


07/11/2016




Airbus Inks $4.4 billion order with Virgin Atlantic and Close to Striking Deal with GoAir
It has been a good week for Airbus. While the company has inked a $4.4 billion deal with Virgin Atlantic for supply of 12 A350s, the company is also reported to be very close to striking a $7.5 billion A350neo deal wiht GoAir.
 
If media reports based on sources that are close to the company and with knowledge of the matter are to be believed, Airbus Group SE is close to striking a deal worth around $7.5 billion at list prices with Go Airlines India Pvt. and is in discussions regarding the purchase of about 70 A320neo planes.
 
The people, who asked not to be identified because the negotiations are ongoing said that even though talks may extend further into the year, an announcement for the deal could come as early as this week at the Farnborough Air Show in England.

A follow-on order would provide a vote of confidence in a model that’s been dogged by issues with its Pratt & Whitney turbines since last year by the order by GoAir as this airline is one of only three carriers that have begun operating the revamped Neo version of Airbus’s single-aisle jet. In the world’s fastest-growing major aviation market where at least seven other budget airlines operate, the Indian carrier is expanding its fleet and hence the requirement for the new crafts.
 
The International Air Transport Association said in a December presentation that air travel in India has grown at the rate of more than 20 percent in 2015 and which is significantly more when compared with 10 percent growth in China and less than 5 percent in the U.S.
 
After the announcement of a deal for the jets back in 2011, GoAir already has a contract for 72 A320neos, two of which have been delivered.
 
Rather than a competing powerplant from CFM International alliance of General Electric Co. and Safran SA, the new batch of crafts would again use Pratt engines, reported the media citing sources with knowledge with the matter.
 
According to the airline’s website, the Wadia Group that owns and controls GoAir also has business interests in diverse areas that include textiles, chemicals and real estate. The airline operates 140 daily flights across 22 destinations within India and was founded in 2005.
 
On the other hand Virgin Atlantic placed an order for 12 Airbus A350-1000 aircraft as part of a $4.4 billion order and signed deal for the same. The new crafts would help the British-based airline modernize its fleet.
 
The new aircraft would be powered by Rolls-Royce engines and that it would own eight of the aircraft and lease four of them, the airline said in a statement. The airline is 51 percent-owned by its billionaire founder Richard Branson and 49 percent-owned by U.S. carrier Delta Air Lines.
 
The airline still had options over six A380 jets and continued to consider that aircraft for its fleet in future, said Virgin Atlantic CEO Craig Kreeger. 

(Source:www.reuters.com & www.bloomberg.com) 






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