SpiceJet places $4.4-bn order for 42 Boeing 737s

Written by Roudra Bhattacharya | BV Mahalakshmi | Hyderabad | Updated: Mar 13 2014, 09:36am hrs
After much speculation for about a year, low-cost carrier SpiceJet announced on Wednesday an order of 42 Boeing 737 MAX aircraft for $4.4 billion at list prices. With deliveries starting in 2018, the new planes will help the countrys third-largest airline compete aggressively with market leader IndiGo and fend off competition from new entrants AirAsia and Tata-SIA.

The order is a first for Boeing in four years and largest by a domestic airline since GoAirs order of 72 Airbus A320s in 2011. By 2018, rival IndiGo is expected to have over 100 aircraft as the airline is adding a new aircraft every month.

Sanjiv Kapoor, COO, SpiceJet, said that the new aircraft will take care of future expansion and funding will not prove a challenge. For larger aircraft, the delivery timelines are long, so we need to make the orders today to take care of the future growth opportunities. The funding plans are in place and will not hold up the deal as the payment schedule will largely start from 2018. We will get around 5-6 planes a year from 2018.

All 42 aircrafts will be powered by General Electric-CFM Leap 1B engines. Apart from the new planes, SpiceJet is additionally taking deliveries of 13 more 737-800s to its current fleet of 36 Boeing 737-800s and 6 Boeing 737-900s apart from 15 Bombardier Q400s.

He added, We will also continue to pursue our policy of expansion in the regional connectivity space. In due course of time we will expand our fleet of turbo-prop planes as well, and it makes sense to stick to Bombardier Q400s.

The SpiceJet scrip went up over 7% during intra-day trade on Wednesday on the BSE, but closed 3.32% up at R14.61.

SpiceJet had first been expected to announce the 737 Max order at the Paris Air Show last year. Earlier this year, rumour mills indicated again that the order will be announced at the Singapore Air Show.

Boeings Asia Pacific senior vice-president Dinesh Keskar also said during the Singapore Air Show that Boeing will soon announce a significant order from an Indian airline.

SpiceJet has been on a discount mode during the fourth quarter of fiscal 2013-14, already announcing four separate windows of heavy discounts despite a R171-crore loss in the third quarter of fiscal 2013-14.