Airbus is said near over US$40b jet deal with US's Indigo

[CHICAGO] Airbus SE is nearing one of the biggest deals in aviation history, negotiating to sell 430 aircraft valued at more than US$40 billion to US airline investor Indigo Partners, people familiar with the matter said.

The transaction would give Airbus the upper hand at the Dubai Air Show, where it has been trailing Boeing in orders.

The purchase would also mark a crowning achievement for Airbus sales chief John Leahy, who is set to retire after a multi-decade career that saw him build the order book into thousands of aircraft and push the European planemaker into a duopoly position with its US rival.

For Indigo Partners, led by Bill Franke, the Airbus deal would provide upgraded single-aisle jetliners to boost the fleets of ultra-low-cost carriers from Denver to Budapest. The aircraft would go to airlines in Indigo's investment portfolio: Frontier Airlines, Mexico's Volaris, European carrier Wizz Air Holdings Plc and upstart JetSmart, which began operating this year in Chile, the people said.

The Airbus-Indigo pact is set to be announced Wednesday, said the people, who asked not to be named because the talks are private. Based on the list price of the A320neo, Airbus's best-selling single-aisle jet, the purchase would be worth US$46.6 billion before customary discounts if Indigo exercises all its rights to the aircraft.

A spokesman for Airbus declined to comment, as did Indigo.

CEO BOOST

The Indigo order would also mark a turnaround for Airbus chief executive officer Tom Enders, who has found himself on the defensive in the last few months amid an investigation into bribery allegations at the company.

Mr Enders has warned employees that the probe is likely to be a drawn-out process that could result in "serious consequences" and "significant penalties."

Mr Enders, a German who has run Airbus for five years, also orchestrated a coup last month when he struck a deal with Bombardier Inc. to take a majority stake in the Canadian company's C Series jet programme. That will give Airbus access to advanced technology while throwing Bombardier a lifeline for its slow-selling aircraft.

Airbus makes the A320neo at different sites around the world, including its main factory in Toulouse, France, as well as in Hamburg, Germany. The company also builds the plane at an assembly line in China to serve the local market, and has recently pushed into the US with a plant in Mobile, Alabama.

Mr Franke, 80, co-founded Indigo Partners in 2002 and was an early proponent and key backer of the ultra-low-cost carrier model, which offers bargain fares and no-frills service.

He stepped down as non-executive chairman of Spirit Airlines in 2013, when Indigo sold off its 17 per cent stake in the Miramar, Florida-based carrier. The move allowed Franke's firm to purchase Frontier out of bankruptcy and convert it to an ultra discounter. Franke is chairman of Frontier, which earlier this year pushed back an initial public sale of shares.

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