Air India in talks with Airbus for $1.5bn jets

Air India wants to purchase at least 14 A320neo aircraft to compete with low-cost rivals like market leader IndiGo, sources said.

Bloomberg/New DelhiAir India, the state-owned carrier, is in talks with Airbus Group to order single-aisle jets worth $1.5bn at list prices, according to a person with direct knowledge of the discussions.The carrier wants to purchase at least 14 A320neo aircraft, according to the person, who asked not to be identified as the discussions are private. An A320neo costs $106.2mn at list prices, and buyers usually get a discount if they order planes in bulk. Air India will sell the new planes to lessors and then lease them back, the person said.A member of the Star Alliance, debt-laden Air India recently has focused on improving services and flying newer planes to compete with low-cost rivals like market leader IndiGo. The order for A320neos also would help consolidate Airbus’s position in India’s single-aisle market, where the French company has had a lead over America’s Boeing among budget airlines.“We’re always in discussion with our customers, but we can’t comment on any specific commercial discussions,” Airbus spokesman Justin Dubon said by telephone.Air India will lease the older version of the A320 until the new planes arrive, the person familiar with the discussions said. The carrier needs to replace at least 14 of the 62 A320s in its ageing fleet this year, the person said.Air India also will decide in the next few days whether to convert its remaining orders for Boeing 787-8 Dreamliners to newer 787-9 jets, the person said. The carrier has taken delivery of 20 of the 27 Dreamliners it ordered.Air India also is considering placing an order for Boeing 737-Max planes to expand its fleet, a person with direct knowledge of the plan said in January.Air India plans to sell real-estate assets to trim its $6.5bn debt load, an aviation ministry official said in January. The airline hasn’t turned an annual profit since its 2007 merger with state-owned domestic operator Indian Airlines.