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SpiceJet strikes Rs 1.5 lakh crore deal with Boeing

SpiceJet strikes Rs 1.5 lakh crore deal with Boeing
With the earlier order for 55 planes and additional 100 new 737-8 MAX aircraft, the no-frills carrier now has firmed up an order for a total of 155 planes, besides purchase rights for 50 B737-8 MAX and wide body aircraft.

Announcing the deal here on Friday, 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,” Singh said.

Currently, the budget carrier has 32 next generation B737s and 17 Bombardier Q400s.

“We are honoured to build upon more than a decade of partnership with SpiceJet with their commitment of up to 205 airplanes,” Boeing Company Vice Chairman Ray Conner said.

According to Singh, SpiceJet would explore different options for financing the deal.

Singh said the induction of the new aircraft, which burn 20 per cent less fuel, would help SpiceJet reduce costs and enhance its ability to compete.

“This is a composite transaction for the 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.

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. When asked about the financing of the deal and its impact on debt to equity ratio, Singh said there would be no “equity dilution” and the balance sheet would be healthy.

In the 2016 July-September quarter, the airline had posted its highest-ever quarterly profit of Rs 59 crore. In the year-ago period, the same stood at Rs 29 crore.

Looking to spread its wings further on rising passenger demand, SpiceJet is mulling operating low-cost long-haul flights with new aircraft.

SpiceJet Chairman and Managing Director Ajay Singh said the idea of low-cost long-haul flights is “at infancy” and would be explored further provided the business model is workable.

Only a handful of airlines, including Singapore-based Scoot and Malaysia’s AirAsia X, have attempted flying low-cost long-haul flights and some of them have been doing good. “We would also explore the possibilities of commencing low-cost long-haul flights in future. We will study this... we are keeping the option open if we think in the future that we can run economically-viable and profitable operations,” he said. He said the airline is looking at the economics of wide body, low-cost long haul format while the kind of planes that can be used is to be decided.
M Post Bureau

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