IndiGo shares rise after airline orders 500 Airbus A320 aircraft in mega deal

IndiGo​ share price NSE,  IndiGo Airbus order: Shares of Interglobe Aviation — which owns and operates airline IndiGo — gained on Tuesday after the company announced placed an order to buy 500 narrow-body planes from Airbus as it embarks on an ambitious long-term growth path, marking one of the largest-ever aircraft purchases by an airline. The stock rose as much as over 2 per cent to Rs 2,490 apiece on NSE after the news. IndiGo shares finished flat on Tuesday, up by 0.09 per cent at Rs 2,434.4 apiece on NSE.

The multi-billion-dollar deal purchase agreement was signed between the airline and Airbus at the Paris Air Show 2023.The airline said in a release that the latest order will provide it with a further steady stream of deliveries between 2030 and 2035. IndiGo operates more than 300 aircraft currently. It has previous orders totaling 480 aircraft, which are yet to be delivered. This IndiGo order book comprises a mix of A320NEO, A321NEO and A321XLR aircraft, it said. 

During an online media briefing from France after the announcement of the order for 500 aircraft, IndiGo CEO Pieter Elbers said this is a historic moment for Indian aviation and speaks of the future of India and IndiGo. "IndiGo is further defining its long-term future, well into the next decade, by placing a firm order for 500 Airbus A320 Family aircraft. This will provide IndiGo a further steady stream of deliveries between 2030 and 2035," the airline said. 

According to the release, the evaluation of the offers was shared and discussed with its board, and consequently endorsed. This new order will bring the strategic relationship between IndiGo and Airbus to an unprecedented depth and breadth, the company said. "We look forward to contributing to the growth of India's air connectivity in its domestic network and into international markets through the expansion of this formidable partnership," Christian Scherer, Chief Commercial Officer and Head of International at Airbus, said in a separate release. 

"It is difficult to overstate the significance of IndiGo's new historic order for 500 Airbus A320 Family aircraft. An order book now of almost 1,000 aircraft well into the next decade, enables IndiGo to fulfill its mission to continue to boost economic growth, social cohesion and mobility in India," Elbers said. With this new order, since its inception in 2006, IndiGo has ordered a massive total of 1,330 aircraft with Airbus. With this additional firm order of 500 aircraft for 2030-2035, IndiGo's order book has almost 1,000 aircraft yet to be delivered well into the next decade, the airline said. Without disclosing the financial details of the latest order, the IndiGo chief said there is a planning horizon for 10 years and the airline can work on the long-term vision of the Indian government. 

IndiGo said the fuel-efficient A320NEO Family aircraft will allow it to maintain its strong focus on lowering operating costs and delivering fuel efficiency with high standards of reliability. The engine selection for this order will be done in due course and so will be the exact mix of A320 and A321 aircraft. 

IndiGo share price target: Should you buy, sell or hold?

• Morgan Stanley has maintained an overweight rating on the counter with a target price of Rs 3,126.
• Citi has maintained a buy stance and has raised its target to Rs 2,900 from Rs 2,400

With inputs from agencies