Low-cost carrier will not dilute equity, but will explore funding options for purchase
Low-cost carrier SpiceJet on Friday said it had placed a firm order to purchase 100 B737-8 MAX aircraft for $11 billion at list prices from Boeing.
In addition to this, it will have the purchase right to buy another 50 B737-8 Max and wide body aircraft. With the earlier deal to buy 55 airplanes, the airline's total order now stands at 205 valued at $22 billion (Rs 150,000 crore).
"This is one of the largest deals in Indian aviation and the largest for SpiceJet," company chairman and managing director Ajay Singh said while announcing the deal. He said the airline would explore various funding options to finance the deal, adding that there would not be "equity dilution" and the balance sheet would be healthy.
Aviation experts said airlines get huge discounts from aircraft manufacturers on the list price but this varies from customer to customer. It could go up to 40-45 per cent besides concessions in maintenance and services. The booking amount for an aircraft, when the order is confirmed, is generally 5 per cent of the agreed price with another 5-10 per cent as pre-delivery payment. At the time of actual delivery the airline has to pay the full price of the aircraft.
As per the current list price, the average price of a B737-8 Max is $110 million.
It is not clear what price SpiceJet has agreed to pay Boeing but the airline has claimed that it has got a favourable deal from Boeing in terms of lower maintenance costs. Singh said that lower financing cost and fuel cost would bring down the unit cost of the aircraft.
"With the next generation of B737 and the B737 MAX, we are sure that we can be competitive and grow profitably,” he said.
The new aircraft will start joining the airline’s fleet from 2018 and this will go on till 2024. It will strengthen its position in the Indian market which has seen double-digit growth for over 24 months. Currently, the airline has 32 next generation B737s and 17 Bombardier Q400s.
The company said that the new order, the biggest for SpiceJet, ends the era of turnaround and marks the beginning of a growth story for the next decade.
“We are now in a very good position to expand our network and operations which includes both domestic and international routes and destinations,” Singh said.
After being on the verge of collapse two years ago, SpiceJet has been in the black for the past seven straight quarters. In the July-September quarter, the airline had posted its highest-ever quarterly profit of Rs 59 crore. Its net profit in the same quarter a year ago stood at Rs 29 crore.
Lower fuel price that accounts for 35-40 per cent of an airline's operating cost and high air travel demand has helped most domestic carriers post record profits
In addition to this, it will have the purchase right to buy another 50 B737-8 Max and wide body aircraft. With the earlier deal to buy 55 airplanes, the airline's total order now stands at 205 valued at $22 billion (Rs 150,000 crore).
"This is one of the largest deals in Indian aviation and the largest for SpiceJet," company chairman and managing director Ajay Singh said while announcing the deal. He said the airline would explore various funding options to finance the deal, adding that there would not be "equity dilution" and the balance sheet would be healthy.
Aviation experts said airlines get huge discounts from aircraft manufacturers on the list price but this varies from customer to customer. It could go up to 40-45 per cent besides concessions in maintenance and services. The booking amount for an aircraft, when the order is confirmed, is generally 5 per cent of the agreed price with another 5-10 per cent as pre-delivery payment. At the time of actual delivery the airline has to pay the full price of the aircraft.
As per the current list price, the average price of a B737-8 Max is $110 million.
It is not clear what price SpiceJet has agreed to pay Boeing but the airline has claimed that it has got a favourable deal from Boeing in terms of lower maintenance costs. Singh said that lower financing cost and fuel cost would bring down the unit cost of the aircraft.
"With the next generation of B737 and the B737 MAX, we are sure that we can be competitive and grow profitably,” he said.
The new aircraft will start joining the airline’s fleet from 2018 and this will go on till 2024. It will strengthen its position in the Indian market which has seen double-digit growth for over 24 months. Currently, the airline has 32 next generation B737s and 17 Bombardier Q400s.
The company said that the new order, the biggest for SpiceJet, ends the era of turnaround and marks the beginning of a growth story for the next decade.
“We are now in a very good position to expand our network and operations which includes both domestic and international routes and destinations,” Singh said.
After being on the verge of collapse two years ago, SpiceJet has been in the black for the past seven straight quarters. In the July-September quarter, the airline had posted its highest-ever quarterly profit of Rs 59 crore. Its net profit in the same quarter a year ago stood at Rs 29 crore.
Lower fuel price that accounts for 35-40 per cent of an airline's operating cost and high air travel demand has helped most domestic carriers post record profits
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