Planes worth $22bn for SpiceJet

Ajay Singh, Chairman and Managing Director, SpiceJet, has announced a landmark deal with Boeing with the purchase of 205 airplanes worth up to $22 billion (`150,000 crores).

SpiceJet is set to fly higher after being close to a shutdown in December 2014. The mega deal is only a step closer, and Boeing has played a very important role in the growth that SpiceJet has seen in the last two years, claims Singh.
“Boeing has been a very good support to SpiceJet and has played a very important part in what turned out be our turnaround story. Today, two years later, SpiceJet has had seven profitable quarters, had 21 months of an occupancy of over 92 per cent, recorded best OTP for the last six months, that too with lowest cancellation rates. We have paid back all our debts and have kept all our commitments in the last two years.”

It was only fitting that Boeing should be part of the journey ahead for SpiceJet, added Singh. Elaborating on the purchase, he said that out of the 205 aircraft, the order of 155 aircraft is firm, which means that these aircraft will definitely be delivered. “In addition to this, there are also 50 purchase rights, which we have as part of this transaction. The 50 purchase rights include the ability on SpiceJet’s part to buy wide-body long haul aircraft in the future. These aircraft will be delivered from 2018 till 2024.”

The new aircraft to be added to SpiceJet’s fleet is the B737-8MAX. “It’s a new aircraft and would enable SpiceJet with its mission to continue reducing cost. The aircraft is 20 per cent more fuel efficient than the previous generation NG aircraft,” said Singh. He added that as part of this transaction, not only have they got a good commercial deal on the aircraft, but this also gives SpiceJet the ability to reduce its cost going forward. In fact, this aircraft, according to him, is also a great aircraft to finance. “We would be exploring different mechanisms to finance the aircraft. This would get us very competitive rates of finance, which would help us improve our costs even further.” Apart from that, the B737-8 MAX would also help them increase the range of flights. “The MAX aircraft has a larger range than our current aircraft, and that opens up many more destinations, including international destinations for us to fly. As part of this transaction, we will be setting up, with Boeing’s assistance, simulator facility for our pilots.” He claimed that the deal would come through without any problem since SpiceJet is quite stable, both in terms of operations and finances. “We can complete all these orders without any problem, or raising an equity, or increasing any debt. We are confident that we can move forward while lowering our financing cost,” asserted Singh.

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