Indian airline IndiGo announced that the terms for a provisional order placed to buy 250 aircraft from Airbus have expired.
The agreement made last October for the single aisle A320neo planes was worth more than $25bn at list prices and was Airbus’s single largest aircraft order ever.
InterGlobe Aviation, who control IndiGo, spoke about the expired term sheet in a draft prospectus for its initial public offering (IPO) that was filed with Indian regulators in June, according to Reuters.
“Although the term sheet has expired we remain in active discussions concerning the potential acquisition of a significant number of aircraft from the A320neo family,” InterGlobe Aviation said in the draft prospectus.
InterGlobe Aviation, which operates IndiGo, is to issue fresh capital of up to Rs1,273 crore* ($200 million) and offer to sell up to 30,146,000 equity shares held by a few existing shareholders, it said in a statement.
Airbus’s chief executive Fabrice Bregier told Reuters that the delay was relating to the timing of IndiGo’s IPO.
“I am not worried about this,” Fabrice Bregier told Reuters.
However, aviation commentators have raised questions over why the deal would be allowed to expire and what it means for the company’s IPO.
“The fact that this has expired raises question that why did IndiGo let it expire. Is it an issue of money or was there some other reason?” Devesh Agarwal, founder of Bangalore Aviation said in an interview with business website Money Control. “Once an MoU expires, it releases the sellers from those terms,” he said.
Since it was founded in 2006, IndiGo has become India’s largest domestic airline by market share and has remained profitable while most of India’s aviation industry has faced losses. The airline is known for its sale-and-leaseback model, selling aircraft to lessors and leasing them in order to reduce costs.
*Crore – a unit in the Indian numbering system equal to ten million –