IndiGo, the Indian low-cost carrier, is poised to sign a firm order with Airbus for 180 A320s. The group, which announced its memorandum of understanding to receive 150 A320neos and 30 A320s earlier last month, will be signing a firm agreement imminently, according to the group’s CFO, Riyaz Peer Mohamed.

Engine selection will be announced by IndiGo at a later date, but Peer Mohamed has indicated a leaning towards CFM, which the company already uses to power its existing Airbus fleet.

The deal has resulted in IndiGo becoming a launch customer for the A320neo, which has since seen a firm order from Virgin America for 30 of the new aircraft variant.

Indigo’s hefty order, which has been described on an Airbus press release as “the largest single firm order number for large jets in commercial aviation history,” follows on from an order by the same airline for 70 A320s in 2005 and a further 30 A320s in 2009.

“We want to keep our aircraft young, which is the reason for doing sale and leaseback deals,” Peer Mohamed noted. The Indian airline aims to be operating 72 aircraft by 2014 and 120 aircraft come 2025. IndiGo’s strategy of negotiating short term leases to phase out its existing aircraft is used as justification for the sizeable order.

Some 40 of the 100 aircraft initially ordered by IndiGo have already been delivered and the airline is operating 35 of them, Peer Mohamed said. Five were financed on the airline’s balance sheet and the remainder are being operated via sale and leaseback deals with a number of leasing groups, including Q Aviation, Hong Kong Aviation Capital and GECAS, according to Ascend Online data.

The airline, which is expecting to 14 aircraft to be delivered in 2011 and 10 in 2012, is understood to be in discussions with AWAS, Jackson Square Aviation, RBS Aviation Capital and International Lease Finance Corporation (ILFC) regarding future sale and leaseback deals.

IndiGo’s decision to opt for the neo is largely linked to the fuel saving benefits, which Peer Mohamed stressed are particularly relevant for low cost carriers. Airbus claims the new engines, combined with the large “Sharklet” wing tip devices, will deliver fuel savings of up to 15%.

The privately held Indian airline reported net profits before tax of USD 107m and a margin “in excess of high teens” in March 2010, the CFO told this news service. 

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This article is bought to you by Ascend's editorial department, an autonomous unit set up to bring you the latest intelligence on deals and transactions. All sources referenced in this article are external to the company and do not include the opinion of any member of Ascend. Any reference to the value of specific companies, aircraft or portfolios is sourced independently outside the company and does not reflect the opinion of Ascend.