NEW DELHI - Air India was expected to seal half of an order worth billions of dollars on Friday for some 495 jets with Boeing and engine suppliers General Electric and CFM International, two industry sources said, as its new owner seeks to revive the airline and compete with much larger rivals.

In November, Singapore Airlines (SIA) and Tata Sons said they plan to merge Air India and Vistara, with SIA holding 25.1 per cent of the merged entity. Vistara is Tata’s joint venture with SIA. The merger is expected to be completed by March 2024.

After months of closely guarded, tough negotiations, Air India is set to place an order for 190 Boeing 737 MAX narrow-body planes as well as some 20 Boeing 787s and 10 Boeing 777X on a day marking one year since Tata Group took control of the former state-run carrier, the sources told Reuters.

The second half of the order, which industry sources have told Reuters includes around 235 Airbus single-aisle jets and about 40 Airbus A350 wide-body aircraft, is expected to be formally wrapped up over the coming days.

Senior Boeing, GE and CFM officials were expected in India to mark the deal on Friday.

Despite earlier expectations of a single coordinated announcement, it remains unclear when either deal may be publicly disclosed, especially with the Aero India air show looming in February when deals like this are usually revealed.

Manufacturers Boeing and Airbus, as well as CFM’s joint-venture partners GE and Safran, declined comment. Air India did not respond to a request for comment.

The order, once finalised, aims to put Air India in the league of large global airlines and make it an influential customer for planemakers and suppliers at a time when its home market is seeing a strong post-Covid-19 travel surge.

Domestic passenger air traffic in India grew 47 per cent in 2022 from the previous year, government data showed.

Analysts caution that the airline faces intense competition, given the connectivity carved out by local and international rivals.

India, which is set to overtake China as the world’s most populous country, has a large, underserved air travel market dominated by budget carrier IndiGo. The bulk of India’s outbound passenger traffic, however, is carried by Middle Eastern airlines like Emirates and Qatar Airways.

Resurgent Air India

Under its new owners, Air India is looking to restore its reputation at home and overseas as a storied carrier with impeccable service and world-class planes.

It has put back in service nearly 20 aircraft that had been grounded for years due to lack of parts and money. The airline has also said it will spend more than US$400 million (S$525 million) to refurbish its entire legacy wide-body fleet of 27 Boeing 787-8 planes and 13 777 aircraft.

The aim is to corner 30 per cent of the domestic air travel market over the next five years, thus narrowing the gap with market leader IndiGo. It also wants to increase by “multiples” its current share of international travel, the airline’s new chief executive Campbell Wilson previously said.

Tata’s four airlines, including two budget carriers, Air India and Vistara, have a combined market share of 24 per cent.

Analysts have said Air India has the ability to claw back some passengers from rival Gulf carriers, but not before it matches their quality of fleet and service. Nor will the domestic battle with IndiGo happen without tough competition from a carrier that continues to expand. REUTERS