The Airline Flying Above the Storm
Bloomberg Businessweek|November 16, 2020
While others are retrenching, IndiGo is spending big to expand in a post-Covid world
Anurag Kotoky

The airlines have seen more than their share of casualties during the pandemic, as travel stopped and carriers’ finances nose-dived. That’s forced many survivors to concentrate on cutting costs, trimming payrolls, and walking away from aircraft orders, but IndiGo, the airline operated by InterGlobe Aviation Ltd., is doing something few of its peers would risk right now: going shopping.

Since taking to the skies in 2006, no-frills IndiGo has grown to control more than half of all local traffic in India, consistently making money in the process. It’s betting it can bounce back stronger once the virus is tamed and ordering billions of dollars of equipment to be delivered after the current crisis.

The airline is in talks with Pratt & Whitney and CFM International, a joint venture of General Electric and France’s Safran, to provide engines to power about 150 new Airbus A320neo jets, according to people familiar with the matter, who asked not to be identified because the negotiations are private. Based on the size of IndiGo’s last engine order—a $20 billion transaction with CFM covering 280 planes that was the largest engine order ever— the agreement could be worth about $10.7 billion, including service, repair, and maintenance.

Such bold and big wagers have been the hallmark of IndiGo since 2005, when the little-known upstart surprised the aviation world by placing a $6 billion order for 100 Airbus jets. Booking such a huge purchase ensured that IndiGo got not only big discounts on the sticker price but also favorable terms on service and maintenance for years to come. While the Indian market exploded as the nation’s emerging middle class began flying for the first time, IndiGo kept on enlarging subsequent orders, including deals for 180 planes in 2011, followed by an additional 250 in 2015, and most recently for 300 more Airbus jets in October 2019.

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