India Approves Purchase of 43 Planes from Airbus
Fri Sep 30, 2005
By Unni Krishnan
NEW DELHI (Reuters) - The Indian government approved on Thursday the purchase of 43 aircraft from French plane manufacturer Airbus at a renegotiated price for state-run Indian Airlines [IA.UL] to replace its aging fleet.
The deal came after last-minute bargaining with Airbus by a ministerial panel that resulted in a saving of $75 million.
"The cabinet committee on economic affairs has approved the decision of the empowered panel of ministers for the purchase of 43 airplanes from Airbus at a renegotiated price," Finance Minister Palaniappan Chidambaram told reporters.
Indian Prime Minister Manmohan Singh announced during British Prime Minister Tony Blair's visit this month the government had cleared the purchase of the aircraft from Airbus for nearly $2.2 billion.
Indian Airlines will receive the first aircraft by September 2006 and the airline will receive a plane a month after that.
Analysts say the deal will boost the fast-growing aviation market in India which has seen several private carriers start operations in the past year. Passenger traffic is expected to grow 20 percent a year until 2010.
Indian Airlines, which has several Boeing Co (BA.N: Quote, Profile, Research) 737s aged between 20-25 years, will receive a mix of short-haul and medium-haul Airbus A319, A320 and A321s.
The deal will allow Indian Airlines to retire older jets as it tries to win back market share from nimble private carriers such as Jet Airways (JET.BO: Quote, Profile, Research) and recently-launched Kingfisher Airlines, owned by brewing baron Vijay Mallya.
In April, Airbus rival Boeing bagged an intensely fought $6.9-billion order for 50 long-range aircraft from India's state-run international carrier, Air-India.
But Airbus, 80 percent owned by the European Aeronautical Defense & Space Co. N.V. (EAD.DE: Quote, Profile, Research) (EAD.PA: Quote, Profile, Research) (EADS) and 20 percent owned by Britain's BAE Systems Plc (BA.L: Quote, Profile, Research), signed a $3-billion deal in June with Kingfisher Airlines for five A380 superjumbos, five A330s and an equal number of planned A350 wide-bodied jets.
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