The parent company of British Airways, Aer Lingus, Iberia, and Vueling, International Consolidated Airlines Group (IAG), intends to expedite the growth of its short-haul fleet by placing an order for 37 Airbus A320neo family aircraft. With this most recent acquisition, IAG will have ordered three short-haul aircraft from Airbus this year.
The first, for six Airbus A320neo and two A321neo planes, happened in March. The second, for 11 Airbus A320neos and three A321neo planes, was announced by IAG in June after 14 options for A320neo family planes were converted into firm orders.
Almost ten-year-old order
12 Airbus A320neo family aircraft options that date back to an order placed in August 2013 will be converted by the airline group. At the time, the agreement for modernising its narrowbody fleet included the intention to buy up to 220 Airbus A320s. This significant commitment was broken down into a solid order for 62, then another 58 for Vueling, and the remaining 100 were to be distributed throughout the airline company as a whole.
IAG had previously stated that it had achieved a significant discount on the order’s original price, which was worth $5.4 billion for the 62 firm orders and roughly $20 billion for all 220 aircraft.
After some time had passed, the airline group changed the order slightly. With this order, IAG will turn 12 options for the Airbus A320neos and A321neos into firm orders. The airline conglomerate will also make a second order for 25 Airbus A320neo family planes, with a potential purchase of an additional 50. Depending on the mix of single-aisle aircraft, the increased agreement is worth between $4.44 billion and $5.18 billion at list prices, but IAG probably got a good deal below that top price.
unidentified variables
Despite any discounts obtained, IAG nevertheless had to make a sizable investment in the acquisition as a whole. IAG is however convinced that it has a variety of financing choices and will select the most suitable source closer to the delivery time—which is anticipated to be between 2025 and 2028—in order to maximise efficiency. The Group stated in a press release:
“The Group’s short-haul fleet will be replaced with the firm aircraft by members of the A320ceo family. The addition of these newest, more fuel-efficient A320neo aircraft is a significant step toward IAG upholding its climate goals”.
conditional approval of IAG shareholders still needs to be given for the new fleet order. The choice of aircraft engines and the carrier(s) that will ultimately operate them have still to be finalised, along with the fleet’s specific composition. The configuration of the new aircraft, however, will be standardised for easier dispatch within the airlines because it will be in accordance with the Group’s current Airbus A320 family aircraft. It is unclear how the Boeing 737 MAX, whose order was confirmed earlier this year, will fit into the fleet plans.
Even though this is IAG’s third and maybe final modification to the multibillion-dollar Airbus narrowbody contract, it was made just one week after Boeing triumphed at the Farnborough Airshow in Great Britain. Just days after the airshow ended, Airbus also disclosed a commitment from Condor in addition to the IAG order. Investors may be relieved that Airbus doesn’t seem to be participating in airshows anymore, but industry experts will find it aggravating.
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