Spicejet likely to add 20 aircraft to its fleet this year; majority Boeing 737 Max

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New Delhi | Published: February 16, 2019 4:39:15 AM

In the third quarter of FY19, the low-cost airline added 12 new planes — nine Boeing 737 Max aircraft and three Q400s — taking the fleet size to 74 aircraft.

spicejet, aviation sector, aviation industryAnalysts expect SpiceJet to accelerate the capacity growth to 20-25% during Q4FY19 on the back of the Max addition.

Budget carrier SpiceJet is likely to add 20 aircraft to its fleet in 2019 with the majority of them being Boeing 737 Max. The Boeing Max will allow the airline to fly to countries that are up to eight hours away from India. “This opens up new markets in China and countries in the Commonwealth of Independent States,” Ajay Singh, chairman and managing director, SpiceJet, said on the sidelines of the CAPA India summit. The Gurgaon-based carrier recently added Jeddah in Saudi Arabia as its ninth international destination.

In the third quarter of FY19, the low-cost airline added 12 new planes — nine Boeing 737 Max aircraft and three Q400s — taking the fleet size to 74 aircraft. In the first two quarters of FY19, the airline had added just one.

Analysts expect SpiceJet to accelerate the capacity growth to 20-25% during Q4FY19 on the back of the Max addition. “With all the additional aircraft being B-737 Max with 15-20% greater fuel efficiency than existing aircraft, SJ (SpiceJet) will also start benefits of lower fuel costs,” brokerage firm Edelweiss noted.

Yields at SpiceJet improved 4% year-on-year in Q3FY19 due to higher pricing power on routes to tier-2 cities which comprise 70% of its routes. The focus on yields led to a 4% y-o-y fall in passenger load factor (PLF) during the quarter. “Contrary to market fears, PLF has proven less elastic to yields than anticipated,” analysts at Edelweiss added.

Analysts at ICICI Securities said SpiceJet is poised to improve yields as it flies more international territories.

During the post-earnings call, the management said yields could go up by 4-5% in the current quarter. According to experts, airlines have added domestic capacities at a faster pace than the rise in passenger traffic. “In order to fill these additional capacities the airlines resorted to low airfares thereby compromising on yields,” Mark Martin of Martin Consulting said. The domestic passenger count increased by 18% y-o-y in calendar year 2018.

The fare scenario improved for domestic carriers in Q3FY19 after SpiceJet, IndiGo and Jet Airways reported losses between `389-1,297 crore in Q2FY19. While Jet narrowed down its losses to `588 crore, IndiGo and SpiceJet made net profits of `191 crore and `55 crore, respectively, for the December 2018 quarter. SpiceJet’s fleet size at the end of Q3FY19 stood at 74 which included 37 Boeing 737 NG aircraft, ten 737 Max, 26 Q400s and one B737 freighter.

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