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Kingfisher to place $3.6 billion order for 15 more Airbus aircraft

Kingfisher to place $3.6 billion order for 15 more Airbus aircraft
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First Published: Thu, Jun 07 2007. 12 25 AM IST
Updated: Thu, Jun 07 2007. 12 25 AM IST
Kingfisher Airlines Ltd, the only Indian customer for the Airbus SAS A380, plans to order five more superjumbos this month, becoming the latest carrier to increase orders for the delayed aircraft, two people with direct knowledge of the matter said.
The carrier also intends to order five A340-600s and five A350s at this month’s Paris Air Show, said the people who declined to be identified because the order has yet to be announced. The entire contract is worth about $3.6 billion (Rs14,400 crore) based on list prices.
The orders are a boost for Airbus, whose project to create the world’s biggest passenger jet has fallen two years behind schedule and caused three consecutive losses at parent European Aeronautic, Defence & Space Co. (EADS).
Two-year-old Kingfisher, founded by billionaire Vijay Mallya, will use the 555-seat A380s to challenge state-run Air India on routes to New York. “The bet on this aircraft is that it will bring down fares on routes between key cities,” said Anish Desai, an analyst at ABN Amro Asia Equities Ltd in Mumbai. “That would help spur demand.”
Airbus will announce orders at the show for “every type”of plane it makes, chief executive officer Louis Gallois said on Tuesday.
Kingfisher ordered five A380s and took options for five more in June 2005. The carrier plans to operate daily flights from Delhi and Mumbai to New York with the planes. It expects to get its first one in 2011, Mallya said in May.
“Kingfisher has to buy new planes to add more routes and increase its market share,” said Amitabh Chakraborty, a Mumbai-based analyst at Religare Securities Ltd. “There is a tremendous amount of latent demand in India that needs to be serviced by the carriers.”
The airline would be the fourth A380 customer to place additional orders for the plane. Emirates Airline, the largest A380 customer, ordered four more in May, raising its backlog to 47. Singapore Airlines Ltd, set to be the first A380 operator, and Qantas Airways Ltd, both raised their orders last year.
Airbus has firm orders for a total of 160 A380s from 14 customers, chief commercial officer John Leahy said on 8 May.
A380 deliveries have been delayed because of problems related to the installation of the superjumbos’ 500 miles (300km) of wiring. EADS will spend €2.5 billion ($3.38 billion) fixing the plane. Winning an A350 order from Kingfisher would also boost Airbus’ bid to challenge Boeing Co.’s 787 Dreamliner. The Toulouse-based plane maker has 13 firm A350 orders compared with 567 for the Dreamliner. The Boeing model will begin commercial service in 2008, five years before the A350.
Qatar Airways pledged to order 80 A350s last month. It expects to sign the final deal, valued at $16 billion at list prices, at the Paris show, which starts 18 June. Singapore Airlines has also said it will order 20 A350s though it hasn’t signed a firm order. Airlines usually receive discounts for big orders.
Kingfisher now operates 30 planes. It aims to win customers from Jet Airways (India) Ltd, the nation’s biggest domestic carrier, and state-run Indian Airlines with new aircraft and in-flight entertainment systems.
Kingfisher’s parent, UB Group, also agreed to buy a 26% stake in Deccan Aviation Ltd, India’s biggest low-fare airline, on 31 May, because of rising demand in the world’s second-most populous country. India’s air travel market may grow sixfold to 180 million passengers by 2020, the government said in April.
Seven airlines, including four low-fare carriers, have started flights in India in the past four years and five more are awaiting approval. “It’s really just the beginning of the Indian aviation sector,” said Peter Harbison, managing director of the Centre for Asia-Pacific Aviation in a phone interview from Sydney.
Indian carriers have ordered more than 450 planes costing $30 billion from Airbus and Boeing in the past four years to tap rising demand for air travel. They may buy another 1,110 planes valued at $105 billion by 2025, Airbus said on 7 December.
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First Published: Thu, Jun 07 2007. 12 25 AM IST
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