SpiceJet places $4.4 billion order for 42 Boeing 737 MAXs, shares jump

Written by Agencies | Hyderabad | Updated: Mar 13 2014, 16:49pm hrs
SpiceJetSpiceJet is seen as a target for investors after India relaxed restrictions on investment by foreign airlines. PTI
DMK leader Kalanithi Maran's budget carrier SpiceJet Ltd today placed an order for 42 737 MAX jets with the US aircraft maker Boeing for USD 4.4 billion (Rs 26,000 crore).

The two sides signed an memorandum of understanding (MoU) to this effect at the inaugural day of the 4th edition of the India Aviation Conference here.

Civil Aviation Minister Ajit Singh inaugurated the 5-day long event.

"SpiceJet greatly values the ties we have built over the years with Boeing. The Boeing Next-Generation 737 aircraft, the mainstay of the fleet ever since SpiceJet started operations, have vindicated our choice by their endurance, reliability and cost effectiveness," said S L Narayanan, Group CFO for The Sun Group.

"The induction of Boeing 737 MAX will further modernise our fleet, improve customer experience, and ensure that we operate the most efficient fleet well into the future," he added.

The 737 MAX brings the most advanced engine technologies to the world's best-selling airplane, building on the strengths of Next-Generation 737, he said. It incorporates the latest-technology CFM International LEAP-1B engines to deliver the highest efficiency, reliability and passenger comfort in the single-aisle market.

"The order is a tremendous endorsement of the 737 MAX's unsurpassed fuel efficiency," said Dinesh Keskar, senior vice president of Asia Pacific and India Sales, Boeing Commercial Airplanes.

SpiceJet places order for 42 737 MAX jets with Boeing

(Reuters) Budget airline SpiceJet has signed a deal with Boeing Co to buy 42 737 MAX jets in a deal worth $4.4 billion at list prices, the company said on Wednesday, sending is shares up more than 7 percent.

The order could help the loss-making Indian carrier, India's fourth-biggest airline by market share, as it seeks new investors.

Delivery of the new jets will begin in 2018, S.L. Narayanan, chief financial officer at SpiceJet's parent, Sun Group, told reporters at an Indian air show in southern city of Hyderabad.

Payments for the order will be closer to the delivery date, he said, declining to give further details on funding plans.

Narayanan said some payments for the latest order would be adjusted against the 12 Boeing 737 NG planes from an ongoing order SpiceJet will be swapping for 737 MAX.

SpiceJet, controlled by billionaire Kalanithi Maran's Sun Group, is seen as a target for investors after India relaxed restrictions on investment by foreign airlines. It has reported interest from potential investors but has not named any.

The long-awaited fleet renewal and the possible stake sale have become intertwined, industry sources have said, with the airline seen as potentially more attractive once it gets the new jets.

Like its domestic rivals, SpiceJet has been losing money on the back of costly fuel and a weak rupee and India's fourth-biggest airline by domestic market share has eyed new planes and new investments to revive its fortunes.

Shares in SpiceJet rose as much as 7.4 percent after the announcement, while the main Mumbai market index was up 0.4 percent. Shares of its local rival, Jet Airways Ltd , were trading down 2.6 percent.

Boeing's 737 MAX aircraft offer fuel savings compared to SpiceJet's existing fleet of current-generation Boeing 737s, industry sources said in January.

SpiceJet reported a quarterly loss in February, hit by high fuel costs and a weak local currency, and industry consultancy the Centre for Asia Pacific Aviation estimates it is on course to post its biggest-ever annual loss.