IndiGo has decided to buy 250 Airbus 320 New Engine Option (NEO) aircraft in what is the largest order ever placed by an Indian airline. With today’s announcement, IndiGo has ordered 530 A320 family aircraft from Airbus.

The 250 Airbus NEO aircraft have a book value of $26.5 billion although it is not uncommon for both the major aircraft manufacturers — Airbus and Boeing — to provide discounts from the listed price if the order size is large enough.

“The entire 250 aircraft order is on a firm basis. We order aircraft once in a while and we look at this order as helping us serve the under-penetrated Indian market for at least the next 10 years,” Aditya Ghosh, President, IndiGo, told BusinessLine . Typically, airlines have a mix of “firm” and “options” on the aircraft they order. While airlines have to take the number of aircraft placed on a “firm” order basis, they can surrender their “options” if they feel that they do not require the aircraft.

In a statement, the airline said that the purchase agreement was signed on August 15. IndiGo plans to fund the latest acquisition through its Initial Public Offer for which it has already filed its draft red herring prospectus.  Ghosh parried a question on how the airline planned to finance the acquisition and merely said that IndiGo has “successfully financed” 100 aircraft since it started.

Three-year wait Airline officials, said that with at least another three years to go for the aircraft to join the fleet, IndiGo had enough time to decide on how best to finance them.  

The airline plans to take delivery of the aircraft between 2018 and 2026.

IndiGo will have to pay a premium for each of the 250 NEOs that it is to take delivery of. The Airbus Industrie website shows that the premium on an A 320 NEO is $9.2 million.

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