British Airways Owner IAG Orders 37 More Airbus A320neos
International Consolidated Airlines Group (IAG), the parent company for British Airways, Aer Lingus, Iberia, and Vueling, is planning to accelerate the expansion of its short-haul fleet by placing an order for 37 Airbus A320neo family aircraft. This latest addition will mark IAG's third short-haul aircraft order from Airbus this year.
The first was in March for six Airbus A320neo and two Airbus A321neo aircraft, followed by the second, which occurred in June when IAG announced it was converting 14 options for A320neo family aircraft into firm orders for 11 Airbus A320neos and three A321neos.
A near decade-old order
The airline group will convert 12 options for the Airbus A320neo family aircraft, dating back to an order made in August 2013. Back then, the deal for its narrowbody fleet modernization included the plan to acquire up to 220 Airbus A320s. This sizeable commitment was split between a firm order for 62, followed by a further 58 for Vueling, and the remaining 100 was to be spread anywhere within the airline group. IAG had previously mentioned that it had negotiated a substantial discount on the list price for the order, which was worth $5.4 billion for the 62 firm orders, and nearly $20 billion for all 220 aircraft.
Years went by, and the airline group made some changes to the order. Today's order will see IAG converting 12 options into firm orders for the Airbus A320neos and A321neos. The airline conglomerate will also place an additional order for another 25 Airbus A320neo family aircraft with the option of purchasing a further 50. The enhanced deal is worth between $4.44 billion and $5.18 billion at list prices depending on the mix of single-aisle aircraft, but IAG likely secured a decent discount on that headline price.
Despite any discounts secured, the whole deal is still a hefty investment on IAG's part. Nonetheless, IAG is confident it has a range of financing options and will choose the most appropriate source closer to the delivery time - which is expected to be between 2025 and 2028. In a statement, the Group said:
"The firm aircraft will be used to replace A320ceo family aircraft in the Group´s short-haul fleet. Adding these latest generations more fuel-efficient A320neos is an important step toward IAG meeting its climate commitments."
The new fleet order is still subject to conditional approval by IAG shareholders. While undecided on the exact mix of the fleet, the aircraft's engine selection is yet to be determined, as is the carrier(s) that will eventually operate them. However, the new aircraft will align with the Group's existing Airbus A320 family aircraft, meaning the configuration will be standardized for more accessible dispatch within the airlines. How the Boeing 737 MAX, which was firmed as an order earlier this year, will fit into the fleet plans remains to be seen.
The multi-billion-dollar line
While this is IAG's third and potentially not the last tweak to the multi-billion-dollar Airbus narrowbody order, it comes just a week after Boeing's win at Britain's Farnborough Airshow. In addition to the IAG order, Airbus revealed a commitment from Condor just days after the airshow closed. The fact that Airbus no longer appears to be playing the airshow game will be relieving to investors but frustrating to industry pundits. A sign of confidence from the European manufacturer, or something else?
