Breaking News : SpiceJet's $22 Billion Boeing Deal

New Delhi:
Highlights

1. SpiceJet to buy 155 planes from Boeing for almost 1.5 lakh crore
2. Deal is a big indicator of how far SpiceJet has come since 2014
3. Very clear we won't have a repeat of Kingfisher experience: SpiceJet

Low-cost carrier SpiceJet is buying 155 planes from Boeing in a deal potentially worth $22 billion or 1.5 lakh crores, including about 40 that were ordered earlier.

The deal is a big and expensive indicator of how far SpiceJet has travelled from December 2014, when it was staring at collapse. "There was a time when most of you would ask when is SpiceJet closing down! Now for seven consecutive quarters, we are making profits. We are the number one airline in terms of on-time performance (OTP) and it has been an incredible journey for us," says Ajay Singh, the man who turned around SpiceJet after taking over from media baron Kalanidhi Maran in January 2015.

When Mr Maran was owner, 42 Boeing narrow-body planes were ordered by SpiceJet in 2014. But the combined force of mounting losses, unpaid fuel bills and airport charges, and unpaid salaries placed the deal on ice.

"My team has done a calculation and it shows that we have had the airline for 680 days. And for every single day, we have made a profit of 1 crore whereas the airline was losing 3 crore every day," said Mr Singh, adding, "We are very careful with our finances."

The caution has shaped the airline's plans to expand its fleet. Two years ago, after taking control of the airline, Mr Singh cautiously ordered 13 Boeing planes from its 737-8 MAX series. As finances improved and the airline turned around completely in 2016, the airline scaled up its order.

In addition to the 155 planes that have been ordered, SpiceJet has the option to order another 50 which will be wide-body. The delivery of these planes will start late in 2018 and continue until 2024. Vijay Mallya, the flamboyant owner of Kingfisher Airlines, had ordered nearly 40 Airbus planes including its famous Dreamliner A380, only to shut down the carrier five years later, seeped in debt.

When asked if SpiceJet is worried about going too big too soon, Mr Singh said, "We are very clear that we won't have a repeat of the Kingfisher experience. There are many options to fund our expansion plans. Right now, the environment globally is very good to get finances or sell your planes to lessors and lease them back. Whatever we do, we will be careful with our finances."

SpiceJet wants to be the Ryan Air or EasyJet of India. Both airlines also place large orders for aircraft but usually only operate them for a few years and quickly sell them (or return to lessors) before heavy maintenance checks are due. So even though the order is for billions, in the end SpiceJet will only end up paying a fraction of the price.

It's a decent model if you have the passenger volume and high aircraft utility rates.

In one of the biggest aircraft order by an Indian carrier, India’s fourth largest carrier SpiceJet on Friday announced that it will buy up to 205 Boeing planes worth $22 billion (Rs 1.5 lakh crore).

SpiceJet chairman Ajay Singh, who has to his credit bringing back the carrier that was on the verge of closure in December 2014, said it has firmed up plane orders for 155 Boeing 737-8 Max and 50 purchase rights for wide body long haul planes like Boeing 787 Dreamliners and the narrow-bodied Boeing 737s.

"This is one of the largest deals in Indian aviation and the largest for SpiceJet," Ajay Singh told reporters.

"Our turnaround story has been one which has very few parallels in the world today. We have achieved seven consecutive quarters of profit, highest on-time performance (OTP) and lowest cancellations and a record load factor of over 90% every month for 20 months in a row," Singh explained. India’s aviation sector is witnessing over 20 per cent growth since past four years and has become one of the fastest growing market globally attracting the attention of stakeholders globally, mainly the plane makers, for whom India now is a crucial market.

For U.S plane maker, Boeing, the SpiceJet agreement will offer it some cushioning in India’s aviation market as its rival Airbus has won record-sized orders with India’s biggest domestic carrier, IndiGo, and another low-cost carrier, GoAir. While Airbus dominates the domestic short-haul market, which uses narrow-bodied planes, Boeing has dominated the long-haul market in India with wide-bodied passenger aircraft. Airbus commands a two-third market share of aircraft in India.

There are 460 narrow- and wide-bodied passenger planes with Indian carriers, and 194 more have been ordered since 2014 excluding the latest orders from SpiceJet.

Indian carriers have largely remained with either Airbus or Boeing for narrow- and wide-bodied aircraft, with state-owned Air India as an only exception to have aircraft manufactured by both manufacturers.

Airlines benefit by having a fleet of single manufacturer as they have to engage fewer pilots and engineers. Boeing, Airbus or any other aircraft require a different team, which increases an airline’s operational costs. Some of the newer Indian airlines—such as IndiGo—have chosen to buy a single type from a single manufacturer. IndiGo, with a fleet size of 125 aircraft, has all narrow-bodied Airbus, while Jet Airways has largely Boeing, with a few Airbus as well.

SpiceJet has a fleet size of 40 aircraft, of which 22 are narrow-bodied Boeing 737-800 and of Bombardiers and turboprops, besides 40 Boeing 737-MAX on order.

GoAir has only Airbus planes. In 2015, IndiGo ordered 250 Airbus A320neo planes, Jet Airways ordered 75 Boeing 737 Max planes and Vistara ordered seven Airbus 320neo planes.

In 2014, SpiceJet ordered 40 Boeing 737 MAX planes and Air Costa ordered 50 Embraer E-2 jets. In July 2016, GoAir ordered 72 Airbus A320neo. IndiGo, Jet Airways, Air India, Air Asia and other airlines also have deliveries lined up for orders placed between 2011 and 2013, which are adding to their fleet in phases and will be delivered by 2020.

http://www.newindianexpress.com/nat...rders-for-205-planes-from-boeing-1559255.html

A 12 year old company which started operation by leasing two planes is now buying 22bn worth planes..It's a rocket achievement..

With this order ,SpiceJet now has the 2nd largest order for this 737 MAX.

42+155= 197.

USAs South West has 200 on order.

Congrats..

Make in India karo BC.

Abba_Dabba_Jabba said:

Make in India karo BC.

Click to expand...

For that , the order should be in 1000s

Airbus and Boeing are wooing indigo and spicejet respectively

Interesting times ahead

Sloth 22 said:

For that , the order should be in 1000s

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OK, so we are making 200 Kamov helicopter and we can't make 100 Boeing 737 ? Which one is more economically viable ?

Abba_Dabba_Jabba said:

OK, so we are making 200 Kamov helicopter and we can't make 100 Boeing 737 ? Which one is more economically viable ?

Click to expand...

Civilian Airlines production requires more investment , especially on the OEM part.

Airbus gave a licence to China for A320Neo because of promised 3500+ order.

Spice Jet is a great turnaround story.

Abba_Dabba_Jabba said:

Make in India karo BC.

Click to expand...

Step by step friend.

https://defence.pk/threads/delhi-mumbai-industrial-corridor-dmic.379702/page-14#post-9108044

Boeing too already gets many components made in India, it will increase even more with time. One day we will definitely have large commercial aircraft assembled in India and the butthurt BD members can cry RMG is more advanced than even that