IndiGo inks deal with Chinese lender to finance 30 new planes

Indian budget carrier IndiGo today signed a $2.6-billion deal with Industrial and Commercial Bank of China Ltd for financing more than 30 new aircraft, IndiGo said in a statement.

The announcement comes on the day Chinese President Xi Jinping arrived in India, when the two countries are expected to sign trade and investment deals worth billions of dollars.

Under the memorandum of understanding, ICBC will provide IndiGo with financing for the planes through either sale and leaseback, financial lease or a commercial lending deal, IndiGo president Aditya Ghosh said in the statement.

IndiGo said it will use the funds to add Airbus A320 planes to its fleet.

The majority of IndiGo's fleet is financed through sale and leaseback agreements, under which a third party owns the planes and rents them out to the airline, and is one factor analysts say that has helped keep the airline profitable while India's other big carriers are bleeding money in a highly-competitive market.

Currently, IndiGo holds the largest passenger share in the Indian market at 32.6 per cent.

IndiGo, owned by InterGlobe Enterprises, is planning to list on the Bombay Stock Exchange next year, earlier reports had said.