Air India signs agreement to purchase 500 new planes: Report

Bengaluru/Paris: In an effort to reinvent itself under its new owners, Air India has signed a jumbo deal for about 500 new planes worth more than $100 billion at list prices. According to industry sources, this could be the airline's single-largest order ever.

The agreement, which would be evenly shared between rival planemaker Boeing and France's Airbus, was initially reported by Reuters in December and may now officially be revealed as early as next week, according to the sources.

Air India has decided to buy 220 Boeing aircraft, including 190 of its 737 MAX narrowbody aircraft, 20 of its 787 widebodies, and 10 of its 777Xs, in addition to 250 Airbus aircraft, divided between 210 single-aisle A320neos and 40 widebody A350s.

While Boeing and the airline reached an agreement on January 27, one year after Tata reclaimed possession of the former state-run carrier, sources said that Airbus and Air India sealed their agreement on Friday, Reuters reported.

Airbus opted not to respond. An email seeking comment was sent outside of regular business hours and did not immediately receive a response from Air India.

The airline announced on January 27 that it was "finalising a historic order for new aircraft."

The procurement underlines Air India's goal to update its outdated fleet and reclaim a sizeable portion of travel between India's sizable overseas diaspora and cities like Delhi and Mumbai, which is primarily controlled by Gulf rivals like Emirates with its newer aircraft.

By purchasing 400 narrowbodies, Air India will also be able to increase its domestic market share and compete with IndiGo for a larger portion of regional international business.

Although the number of Airbus aircraft is significantly less than the 275 initially planned, sources did not completely rule out Air India making a provision for eventual top-up purchases or leases.

It wasn't immediately obvious to what extent choices that might alter the final count once final orders were received were included in the agreed-upon numbers.

The record order intends to elevate Air India to the level of major international carriers and establish it as a significant client for suppliers and plane makers at a time when its domestic market is experiencing a significant post-COVID-19 travel surge.

Air India, with its maharajah mascot, was previously renowned for its opulently adorned aircraft and first-rate service, but as its financial problems grew in the mid-2000s, so did the airline's goodwill.

The airline hopes to rebuild its status as a storied provider of first-rate aircraft and immaculate service both domestically and internationally under the leadership of its new owners.