SpiceJet strikes Rs 1.5 L cr deal with Boeing for 205 aircraft

In one of the largest deals in the fast-growing Indian aviation sector, SpiceJet will buy up to 205 new aircraft from Boeing with the order valued at Rs 1,50,000 crore.
The multi-billion dollar deal struck after long-drawn discussions will see the airline buying more fuel-efficient 155 Boeing planes, with the delivery slated to start from 2018.
With the earlier order for 55 planes and additional 100 new 737-8 MAX aircraft, the no-frills carrier now has firmed up order for a total of 155 planes. SpiceJet will also have the rights to purchase 50 more aircraft comprising B737-8 MAX and wide-bodied ones -- the latter likely to be used for possible "low-cost long haul" operations in future.

Announcing the deal here today, SpiceJet Chairman and Managing Director Ajay Singh said the total order of 205 aircraft is valued at Rs 1,50,000 crore (USD 22 billion).
"This is one of the largest deals in Indian aviation and the largest for SpiceJet," he said.
Currently, the budget carrier has 32 next generation B737s and 17 Bombardier Q400s.

In less than a month, this is the second big announcement after rival GoAir firmed up the order for 72 new planes from Airbus that is estimated to be worth over Rs 52,000 crore amid the domestic market growing at the fastest pace in the world.

According to Singh, SpiceJet will explore different options for financing the deal.
Singh said the induction of the new aircraft, which burn 20 per cent less fuel, will help SpiceJet reduce costs and enhance its ability to compete.
After being on the verge of going belly up two years ago, the airline has been in the black for the past seven straight quarters.
Delivery of the 155 new planes will start from the third quarter of 2018 and end in 2024.
Boeing's Senior Vice-President Sales (Asia Pacific and India) Dinesh Keskar put the cost of the 100 new aircraft at around USD 11 billion.

As part of the deal, SpiceJet in collaboration with Boeing will set up a simulator facility -- which is expected to be ready in 2018 -- for pilot training.
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"This is a composite transaction for purchase of up to 205 aircraft valued at USD 22 billion," Singh said, adding that the focus is on growing the airline in a responsible and profitable manner.
Without divulging specifics, he said Boeing has been kind enough to offer "commercial deal" on the aircraft, besides working hard on reducing maintenance costs.
SpiceJet, which has seen seven straight quarters of profitability, has flown more passengers in the last two years and has paid back all debt, Singh said, adding that various costs have also been cut down.

"We have kept all our commitments in the last two years," he added.
According to the SpiceJet chief, various financing options are being explored. Singh expressed hope of getting very competitive that would help in further lowering overall costs.
"Sale and leaseback are a good option. We can also look at financing from Exim Bank. There are many options available with us, but we would look for the model which make us available the cheapest financing," he said, adding that the balance sheet would be healthy after the deal.
"We have zero debt... There would be no increase in debt or equity dilution because of this deal."

The order comes as a big boost for US aircraft maker Boeing as rival Airbus has been garnering big-ticket orders from various Indian carriers, including IndiGo and GoAir.
"We are honoured to build upon more than a decade of partnership with SpiceJet with their commitment of up to 205 airplanes," Boeing Vice-Chairman Ray Conner said.
Meanwhile, SpiceJet is mulling operating low-cost long haul flights with new planes.