IndiGo’s term sheet to buy 250 aircraft expires

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Mumbai | Updated: July 3, 2015 9:30:48 AM

InterGlobe Enterprises, which runs the country's biggest airline by market share under the IndiGo brand, said the term sheet...

indigo, indigo ipo, indigo ipo 2015, indigo ipo news, InterGlobe, indigo airlines, indigo airlines market share, ipo, initial public offering, indian aviation, indian aviation news, interglobe aviation indigo airlines, indigo ipo newsIndiGo said it is in discussion with the aircraft makers to purchase a significant number of aircraft. (AP)

InterGlobe Enterprises, which runs the country’s biggest airline by market share under the IndiGo brand, said the term sheet, consisting of provisional orders to buy 250 Airbus aircraft, has expired.

The Gurgaon-based airline, however, added it is in discussion with the aircraft makers to purchase a significant number of aircraft.

“On October 12, 2014, we signed a term sheet with Airbus to enter into a purchase agreement to acquire 250 A320neo aircraft. Although the term sheet has expired, we remain in active discussions concerning the potential acquisition of a significant number of aircraft from the A320neo family,” InterGlobe Enterprises said in a draft red herring prospectus.

“There is no assurance that we will be able to negotiate the additional aircraft purchase from Airbus or that any such purchase would use a structure or contain terms comparable to our 2005 and 2011 orders from Airbus,” it added.

No-frill carrier Indigo had signed a provisional order for 250 A320neo jets from Airbus in October. The order was also the European aircraft maker’s biggest-ever potential order and is worth $26 billion at the list price, according to agency reports.

“Normally, when an (aircraft) order is delayed, the airline taking the delivery is charged a higher price, if the delay comes from their end. However, IndiGo in this case could also get a better pricing. This will depend on the airline’s aircraft demand and supply situation at the time of making the final order,” said an analyst tracking the sector with a foreign consultancy. IndiGo, which had 94 aircraft in its fleet on March 31, plans to extend the operating lease of 24 of its current aircraft, seven of which had been scheduled to be redelivered to its lessors in FY15, the airline said in the draft red herring prospectus.

The airline plans to expand its fleet size to 111 and 137 aircraft  by the end of FY16 and FY18, respectively.

“We expect to add another six previously used aircraft from various lessors between May 2015 and March 2016,” it said. “If these leases, together with the deliveries under our 2011 order, are insufficient to meet our short to medium term expansion needs going forward, we may extend additional leases and / or lease additional used aircraft,” it added.

FE had on Wednesday reported that InterGlobe Enterprises, which runs IndiGo, is looking to raise Rs 2,000-2,500 crore through initial public offering (IPO).

The no-frills carrier also retained its leadership in the domestic market during May, a month that saw a 9% increase in the number of passengers carried over the previous month with more people opting for air travel during summers.

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