By Robin Elsham BOMBAY, March 28 (Reuters) - India's largest domestic airline said on Thursday it is buying 43 aircraft from Airbus for $2.1 billion, handing the European maker a major victory over Boeing as both fight to stop a big drop in sales since September 11. State-run Indian Airlines [IA.UL] said it was placing an order for Airbus' 122-seater A-319s, 145-seater A-320s and 172-seater A-321s to be delivered over the next five years. "Yesterday the board approved the purchase from Airbus of 43 aircraft for a total cost of 100.89 billion rupees ($2.07 billion)," Indian Airlines spokesman Robin Pathak told Reuters. All aircraft will be fitted with CFM56 engines jointly made by General Electric Co (GE) and Snecma, a French state-owned company, providing relief to the jet engine divisions of those companies. The order is the biggest ever placed by an Indian airline and comes as global orders for both aircraft and engines have plunged since the September 11 attack on the World Trade Center and Pentagon in the United States. Boeing (BA) expects to ship 380 jets this year, down from 527 in 2001, and Airbus (EAD)(EAD) is predicting 300 deliveries, down from 325, Merrill Lynch said in a report issued last week. >From 680 deliveries in 2002, Merrill forecasts a further decline to 558 in 2003. Similarly, Snecma said in February it expected deliveries of CFM56 engines, its biggest money spinner, to plunge to between 700 and 750 this year from 1,044 in 2001. The Indian Airlines' order extremely valuable not only because it is so large, but because it is one of the few jumbo orders expected to be placed this year. FLEET RENEWAL Indian Airlines is going forward with a massive fleet renewal programme which industry experts say is required to counter competition from fast-growing domestic rival Jet Airways, and to make itself more appealing to a buyer. The government last year tried to sell a 26-percent stake in Indian Airlines to a strategic partner, but drew no interest because of the additional amount a buyer would need to invest to turn around the money-losing airline. On Thursday, Indian Airlines said it expects to post losses for the past year and for 2002/03, putting it in the red for three years in a row. The airline estimated its loss at 2.51 billion rupees for the year ending March 31, and forecast a loss of 989 million rupees for next year. It currently has a fleet of 56 aircraft, with an average age of 13 years. Two years ago 51 people were killed when a 20-year-old Boeing 737 operated by a subsidiary, Alliance Air, crashed, stirring concern about the airworthiness of Indian Airline's own aircraft. Privately owned Jet Airways, by comparison, operates a 38 aircraft fleet with an average age of about three years. That disparity caused some passengers, especially business travellers, to switch to flying Jet, enabling the upstart airline to gain market share. Indian Airlines now holds just over a 50-percent share of the domestic air market. Jet Airways, founded in 1992, has grabbed about 40 percent. Indian Airlines operates 210 flights daily to 85 destinations -- 68 domestic and 17 overseas, mostly in surrounding countries, Southeast Asia and the Middle East. Its fleet renewal programme must still be approved by the Cabinet Committee on Economic Affairs and the Public Investment Board. (US$1 = 48.80 rupees) ©2002 Reuters Limited.