SpiceJet hits new high on signing pact with Boeing for 40 737 Max airplanes

The stock hit a new high of Rs 128, up 2.4% on BSE.

SpiceJet hit a new high of Rs 128, up 2.4% on the BSE, after the company and Boeing on Monday signed a memorandum of understanding for 40 737 MAX airplanes.

“The agreement, valued at approximately $4.74 billion at current list prices, is split evenly between 20 new orders for the 737 MAX 10 and conversions of 20 of the low-cost carrier’s 737 MAX 8 airplanes of its current order to 737 MAX 10s,” SpiceJet said in a press release.

“With the introduction of our 737 MAXs next year, we will be able to further expand our network, while keeping our costs low for our customers,” said Ajay Singh, Chairman and Managing Director, SpiceJet.

The company said the 737 MAX 10 will be the most profitable single-aisle airplane, offering the lowest seat costs ever.

“We maintain our view that yields will harden for SpiceJet going forward, albeit at a slower pace, owing to greater capacity addition by Indigo. However, the recent correction in crude prices, along with a stronger rupee, could result in cost tailwinds boosting profitability. The launch of flights under UDAN (Ude Desh Ka Aam Naagrik) is expected to further boost growth over time,” analyst at HDFC Securities said in results review.

Thus far in the calendar year 2017, the stock has outperformed the market by surging 120% as compared to 17% rise in the S&P BSE Sensex. Around 1.7 million shares changed hands on the counter so far against an average 4.43 million shares were traded daily in past two weeks on BSE.