The order includes 430 narrowbody and 70 widebody aircraft, and will be delivered to the airline over the next seven to eight years.
While European manufacturer Airbus has cornered a major share of the order with 240 A320 Neo and 40 A350 aircraft, Boeing would supply 190 737 Max, 20 787 and 10 777x planes.
A formal announcement is expected next week and will be worth $150 billion on the list price, although large discounts are common in such purchases.
While the order will be placed by Air India, it will also cater to its low-cost unit Air India Express which has recently been merged with AirAsia India.
Air India didn’t respond to a query.
The deal with Airbus was finalised on Friday, during a meeting attended by Tata Sons chairman N Chandrasekaran and Airbus chief commercial officer Christian Scherer, the people said.The deal with Boeing was signed on January 29 at Bombay House, the headquarters of Tata Sons. Simultaneously, for the supply of engines, the airline has signed deals with engine makers CFM International, a joint venture between GE Aviation and French engine maker Safran and British engine manufacturer Rolls Royce
Winning a narrowbody order in India would be a coup for Boeing, as rival Airbus dominates in the Indian market, one of the world’s fastest growing. IndiGo, India’s civil aviation market leader, is the world’s largest customer for Airbus’ A320 family of narrowbody aircraft.
“While the narrowbody aircraft will be taken on a sale-and-leaseback model, the widebody will be directly bought by Air India as lease rates of those jets still remain low after the pandemic,” said a person aware of the development.
Under the sale-leaseback arrangement, the aircraft owner sells the aircraft to the lessor, who immediately leases the aircraft to the entity that placed the order. This practice allows airlines to unlock cash while operating the aircraft.
The airline is seeking to ensure that it has delivery slots booked in advance, as the global supply chain for aviation is plagued by a shortage due to a faster-than-expected rebound in travel after the pandemic.
Since taking over Air India early last year, the Tata Group has engaged with aircraft manufacturers as part of revamping the fleet. Chief executive Campbell Wilson had said that Air India was planning to expand its fleet and global network, aiming to increase its market share to 30% on both domestic and international routes from India over the next five years.
The new narrowbody planes will enable the airline’s plans to serve short-haul destinations within a four- to five-hour range as it aims to be a competitor to IndiGo, which currently has more than 50% of the domestic market. The widebody aircraft will help it increase the footprint across North America, Europe and Australia.
Tata Sons is in the midst of consolidating its aviation business. AirAsia India and Air India Express have been merged into one low-cost unit and Vistara will be absorbed into Air India to create a single full-service airline.
Air India, since its change of ownership, has returned to service 10 narrowbody and six widebody aircraft that had been grounded. It has also undertaken a $400 million project to refurbish interiors of its widebody fleet, comprising 27 Boeing 787-8 and 13 Boeing 777 aircraft.
“As new aircraft start coming in along with improvement in product and the older ones are retired, the unit cost will also improve significantly which will take the airline close to net profitability,” the person cited earlier said.
Air India is likely to add almost 50 aircraft by the end of FY24, which will increase its capacity by about 50%.
