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Wednesday, March 29, 2023

Air India’s $10.6 Billion Deal with Boeing and Airbus Signals Significant Investment in Modernizing Fleet

Air India, the Indian flag carrier airline, has signed a deal to purchase 30 Boeing 777X and 14 Airbus A321neo aircraft, making it the world’s largest order of passenger aircraft. The order is part of Air India’s plan to replace its aging fleet with modern, fuel-efficient planes. The deal is worth $10.6 billion, with Boeing receiving approximately $7.5 billion and Airbus receiving around $3.1 billion.

The agreement was announced during UK Chancellor Rishi Sunak’s visit to India and was hailed by both Sunak and US President Joe Biden. Sunak praised the deal, stating that it will “boost UK jobs and exports” while also strengthening the UK-India relationship. Biden also applauded the deal, stating that it will support American jobs and exports, as Boeing is an American company.

Air Bus Newsroom Tweeted – “Tata-owned @airindiain to acquire 250 Airbus aircraft – A350 aircraft of choice for Air India’s renaissance in long haul travel – A320 Family consolidates its leading position in India.”

Sunak said, “This landmark deal between Air India, Airbus, and Rolls-Royce demonstrates that the sky’s the limit for the UK’s thriving aerospace sector.” Sunak noted Airbus will manufacture the wings in the UK and A350 aircraft will be powered by Rolls-Royce’s XWB engines. He added the deal will provide more jobs in the UK’s aerospace sector which employs over 1,11,000 people as of 2021. The UK Prime Minister further mentioned, “India is projected to be the world’s third largest economy by 2050, so export wins like this are a big boost to the UK trade- a key way we can grow our economy.”

The purchase of the 30 Boeing 777X planes marks Air India’s return to purchasing Boeing aircraft after a decade-long hiatus. The airline had previously placed orders for Boeing 787 Dreamliners in 2006, but the order was cancelled in 2011 due to financial difficulties. The new order is expected to strengthen the relationship between Air India and Boeing, as well as boost the airline’s long-haul capabilities.

Commenting on the deal, UK Business and Trade Secretary Kemi Badenoch said it is a shot in the arm for UK exports as India and the UK are negotiating free trade agreement (FTA).

Badenoch said, “It’s a shot in the arm for UK exports as we aim to sell 1 trillion pounds of goods and services a year to the world by the end of the decade. We’re currently negotiating a trade deal with India that could boost trade by up to 28 billion pounds a year by 2035. Export wins like this are another big step to our nations forming a closer trading relationship.”

US President Joe Biden and French President Emmanuel Macron recently had a conversation with Indian Prime Minister Narendra Modi regarding the largest aircraft order in the world. The two leaders highlighted how the purchase of over 200 Boeing aircraft would create employment opportunities for more than a million people in the US and also aid Air India in fulfilling its transportation requirements. This information was conveyed through a statement released by the White House.

The release further stated, “This announcement also reflects the strength of the US-India economic partnership. Together with Prime Minister Modi, I look forward to deepening our partnership even further as we continue to confront shared global challenges– creating a more secure and prosperous future for all of our citizens.”

French President Emmanuel Macron said the Air India-Airbus contract “marks a new stage in India and France’s strategic partnership.” Macron tweeted, “The contract that Airbus and Tata Sons signed this morning marks a new stage in India and France’s strategic partnership. Thank you Narendra Modi for your confidence in France and our industry.”

Overall, the deal is a significant investment for Air India and is expected to provide benefits for both the airline and the wider aviation industry. The purchase of modern, fuel-efficient planes will enable Air India to improve its services and reduce its environmental impact, while also supporting the economies of the countries involved in the deal.

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