Airbus and Boeing split US$3.1 billion order from Vistara

Bloomberg

Thu, Jul 12, 2018 - Page 10

Airbus SE and Boeing Co split firm orders for 19 jets from the Indian affiliate of Singapore Airlines Ltd that is seeking to start international flights and bolster local operations.

Vistara, as the airline is known, is to buy 13 of the A320neo and A321neo jets that have a list price starting at about US$111 million each and six Boeing 787-9 Dreamliners at about US$282 million apiece.

The combined order is valued at US$3.1 billion, excluding customary discounts, the carrier said in a statement yesterday.

“This order is very important for Vistara because we always felt that international operations will give us a leverage on further improving our financial performance,” CEO Leslie Thng (湯康莊) said in an interview.

As a full-service model in an “extensively competitive” local market, Vistara is not yet profitable, he said.

Offering premium services in three classes, the airline operates in one of the world’s most expensive aviation markets, where intense competition means fares can be as low as US$0.02 despite jet fuel being the costliest in Asia.

Still, the allure of the nation of 1.2 billion people has prompted Singapore Air, Etihad Airways PJSC and AirAsia Bhd to seek local partners and compete against the likes of budget airlines such as IndiGo and SpiceJet Ltd.

Additionally, Vistara will be renting 37 new A320neo family aircraft from leasing companies, according to its statement. The airline has a fleet of 21 single-aisle Airbus planes.

The latest narrow-body A320neo family jets ordered by Vistara will be powered by Leap 1-A engines made by CFM International and are to be delivered between next year and 2023.

The bigger Boeing jets would be handed over in 2020 and 2021, it said. The Dreamliners will have General Electric Co’s GEnx-1B turbines.

Vistara, which is 51 percent owned by local conglomerate Tata Group and offers premium services in three classes, controls just about 4 percent of the local market — the smallest share among all carriers with a nationwide network. It has said that its second phase of growth will be more aggressive.

Tata and Singapore Airlines will fund the latest plane purchase by Vistara, Thng said.

Vistara has sought approvals to fly overseas and will launch its first international flight in the second half of this year, he said.

The airline, which started operations in 2015, also has options to purchase seven more of the A320neo family aircraft and four more Dreamliners.