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Airbus secures its biggest deal ever

Airbus has finalized the aerospace company's biggest order after it inked a $26.5 billion deal with India's popular budget airline, IndiGo.

India's largest domestic airline, IndiGo has ordered 250 A320neo family aircraft, a deal which is worth around $26.5 billion at list prices, the European aviation giant confirmed Monday.

The A320neo aircraft is a more fuel efficient version of Airbus' A320, which will help IndiGo deliver more low-cost fares and enable the company further opportunity to create a greater amount of jobs and growth, Aditya Ghosh, president of IndiGo confirmed with CNBC over the phone Monday.

Kiran Rao, head of strategy and marketing at Airbus, told CNBC Monday what the company was "very excited now that they've (IndiGo) ordered 250 aircraft, making it the largest deal in the history of Airbus."

"With India being one of the fastest airline markets in the world, Airbus is extremely proud of this particular deal."


Credit: Airbus S.A.S.

Within 20 years, the International Air Transport Association expects to see India's air travel market increase dramatically from today's levels, predicting it to become the third largest global market by 2031.

In terms of Airbus' future growth strategy, Rao said India was a key component to the business' future.

"India is probably the fourth-largest aircraft ordering market in the world over the next 20 years. When we first started India back in the 1990s, we were forecasting that India would have about 300 airplanes over 20 years. Today, the forecast in India is nearly 1,700 airplanes for the next 20 years."

"So it's a very big market and the success that Airbus has had in India over the last few years, puts us at 80 percent market share in one of the most important markets in the world today."

Rao went on to add that he was confident that low-cost emerging market airlines were going to dominate global air trade by 2025; especially with carriers such as IndiGo giving people an opportunity to travel more.

IndiGo has had a long history with the aircraft manufacturer. In 2005, the Indian airline placed an order for 100 A320s, and six years later, the company became the first Indian operator to pledge an order to Airbus' A320neo, in 2011. Now IndiGo has ordered a total of 530 A320 Family aircraft, according to Airbus' website.

IndiGo's Ghosh told CNBC that he was "very happy" with the latest deal, and its relationship with Airbus will create even more stability and hopefully profitability for their business model.

Ghosh told CNBC that in the aircraft market, India was very "under-penetrated" with less than 400 commercial planes in the country. As a result the "market potential is immense and the opportunity is starting right at us," but it's all down to who will take advantage of this opportunity.

"We are really building our business on the fundamental premise that in an under-penetrated market, with a lot of demand and very little supply; we want to be able to continue to grow. We're only nine years old, and within that time, we have just under 40 percent of India's market. That shows the sheer potential that this country holds."

Ghosh confirmed that Airbus would start delivering this latest batch to IndiGo from 2018 up until 2026; adding that the A320neo's fuel efficiency would have a "very positive impact" on their bottom line.

Shares in French listed firm, Airbus were up by as much as 1.9 percent in early trade, however, pared gains to trade 0.3 percent higher around 3 p.m. London time.

—By CNBC's Alexandra Gibbs, follow her on Twitter @AlexGibbsy.