Airbus SE and Boeing Co. secured more than $75 billion in single-aisle plane commitments Wednesday, demonstrating unrelenting appetite for their most popular planes from discount carriers as the airlines lock in deals to support growth for years to come.
Airbus secured what it called one of the biggest aircraft deals in its history with a 430-jet agreement with airlines linked to Indigo Partners LLC, a U.S. private-equity group with stakes in some of the fastest-growing low-cost carriers on three continents.
Continue Reading Below
The proposed deal, announced Wednesday at the Dubai Airshow, carried a sticker price of almost $49.5 billion before the customary discounts that can reduce the true value by 50% or more, though consolidation in the airline and finance industries is giving buyers more clout.
Boeing followed shortly after with a deal to sell Dubai-based Flydubai up to 225 more of its 737 Max 8 planes at a list price value of $27 billion. The deal is for 175 firm commitments with purchase rights for more, Boeing said.
Airbus and Boeing are aggressively boosting production of these single-aisle planes to satisfy demand. Executives at both manufacturers in recent months have said they could build more planes. Demand is there, they say, though there are concerns suppliers may struggle to keep pace with the torrid pace of production.
Airbus said the Indigo Partners deal tops one by other budget airlines AirAsia and India's unrelated IndiGo, making the financial investor its biggest customer by list price.
Indigo, based in Phoenix, is led by industry veteran Bill Franke, who has invested in a number of carriers including holdings in Frontier Airlines in the U.S., Hungary's Wizz Air Holdings PLC and Mexico's Volaris. It also backed JetSmart, a new Chile-based carrier that launched this year.
The preliminary agreement covers 430 planes--73 A320neos and 157 of the larger A321neo model--doubling the potential orders from the four Indigo-linked airlines.
Denver-based Frontier plans to take 134 jets, with Budapest-based Wizz receiving 146 planes. Volaris would receive 80, with 70 for startup JetSmart.
The European manufacturer has trailed rival Boeing Co. in securing new orders this year, garnering more than 300 before Wednesday's announcement, compared with more than 600 for its U.S. rival.
It is unusual for airlines to order aircraft jointly, though Dubai's Emirates Airline and Qatar Airways cooperated as launch customers for the Boeing 777X at the 2013 Dubai Airshow.
Indigo didn't disclose when first deliveries were due to start, or what engines they would choose. The Pratt & Whitney unit of United Technologies Corp. and a joint venture between General Electric Co. and Safran SA offer rival engines.
Airbus and Boeing both have backlogs for their single-aisle jets stretching five or more years, even though both are boosting output.
Deals of this scale have become more commonplace in recent years, in part because of the explosive growth of low-cost carriers.
However, analysts are cautious on whether some of the big customers will take all of their planned jets on schedule, particularly if an economic downturn slows traffic growth. Plane makers can boost profits by agreeing to defer aircraft deliveries.
Gus Kelly, chief executive of aircraft lessor AerCap Holdings NV, this week said placing aircraft orders often represents a career highlight for some airline CEOs. Speaking at an investor conference, Mr. Kelly said that some of these orders had served only to benefit the shareholders of Airbus and Boeing.
Write to Doug Cameron at email@example.com
(END) Dow Jones Newswires
November 15, 2017 04:50 ET (09:50 GMT)