By Kylie Madry
MEXICO CITY (Reuters) -Mexican airline Viva Aerobus has signed a memorandum of understanding to purchase 90 Airbus A321neo aircraft, the carrier said on Wednesday, in a deal likely worth several billion dollars.
The announcement confirms Reuters reporting last month that the two were close to a tie-up on an order of that magnitude following talks coinciding with the Paris Airshow.
The companies did not name a price for the aircraft, and Airbus no longer publishes catalog prices. Based on 2018 listing prices, the deal would be worth some $11.7 billion before typical industry discounts.
The agreement brings Viva's order book up to 170 Airbus aircraft, the carrier said in a statement, all part of the A320 family.
The A321neo, a 240-seat plane, is popular among airlines due to its size and fuel efficiency.
Viva Chief Executive Juan Carlos Zuazua declined to disclose the agreed-upon price in an interview, but said the airline was open to analyzing a number of financing options to reach "the lowest cost of ownership."
The planes will be powered by GTF engines produced by Raytheon (NYSE:RTN)'s Pratt & Whitney, and Airbus is expected to start delivering the aircraft in 2027, Pratt & Whitney said in a separate statement.
The engines, in part, help reduce fuel consumption by some 20% compared to previous-generation aircraft, Zuazua said, cutting the airline's spending on what represents the largest cost for carriers.
Viva said the aircraft order would drive both domestic and international growth plans, taking into account that Mexico is expected to recover a U.S. air safety rating in coming months.
Mexico was downgraded by the U.S. Federal Aviation Administration in May 2021 for lack of compliance with international standards, blocking Mexican carriers from adding new flights to the U.S. and preventing some marketing tie-ups.
Viva is planning route expansions to U.S. cities where it currently flies, Zuazua said, adding there were additional areas of growth in domestic routes and to South America.
The CEO said Viva should service Canada, where it currently operates charter flights, with commercial routes by 2024.
An additional boost will come from the joint venture with U.S. airline Allegiant announced in 2021, Viva said.
That deal, which is awaiting U.S. Department of Transportation (DOT) approval and includes a $50 million equity investment from Allegiant in Viva, identified more than 250 new U.S.-Mexico route opportunities when announced.
Zuazua said following DOT approval, the two airlines would begin mapping out network plans and pricing for routes.