Airbus Just Outdid Boeing with a Massive Airplane Deal
Airbus (EADSY) just one-upped its perennial rival, Boeing, by announcing the biggest commercial-plane deal in its history at the Dubai Air Show: an order of 430 jets valued at a list price of $50 billion.
Boeing had opened the Dubai Air Show on November 12 by inking a $15.1 billion deal with Emirates for 40 American-made 787-10 Dreamliners.
On Wednesday morning, Bloomberg reported that Bill Franke of private equity firm Indigo Partners signed the preliminary order with Airbus to buy 430 planes comprising of 273 A320neos and 157 A321neos. Indigo Partners will distribute the aircraft amongst the ultra-low cost airlines it has set up around the world, including Frontier Airlines in the U.S., Mexico’s Volaris, Wizz Air of Hungary and newcomer JetSmart of Chile.
The sheer size of the deal has caught many in the aviation industry by surprise. To put the deal in a larger context, a single airline with 430 planes would rank among the 10 largest carriers on the planet. Airbus tweeted that it was the “largest single commercial announcement ever.” However, while the public price of the planes is $49.5 billion, Airbus “regretfully” confirmed that Indigo did not pay that price, without revealing the final cost.
“We’ve done a little research and we don’t think there’s been a larger order ever,” said Franke said at the press conference in Dubai.
The agreement between the U.S. investor and Airbus means a major rebound for the aircraft maker at the Dubai Air Show, where it has been significantly less successful than arch rival Boeing (BA) in bringing in orders this year. The deal also means Airbus sales chief John Leahy, who is set to retire after more than 20 years and deals for thousands of jets, can leave the company in a blaze of glory.
Airbus shares rose as much as 3.9%, taking their gain this year to 38%.