The Telegraph
Thursday , March 13 , 2014
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Spicy start to air show
Local airline in mega deal

Hyderabad, March 12: SpiceJet today inked a pact to buy 42 737 MAX jets from the US aircraft maker Boeing for $4.4 billion (Rs 26,000 crore). The budget airline’s shares rose 3 per cent on the bourses on the news of the deal.

S. L. Narayanan, CFO of SpiceJet’s parent Sun Group, and Dinesh Keskar, senior vice-president of Asia-Pacific and India sales, Boeing, signed the deal at the inaugural day of the fourth edition of the India Aviation Show here.

“The induction of Boeing 737 MAX will further modernise our fleet, improve customer experience and ensure that we operate the most efficient fleet well into the future,” said Narayanan.

While today’s plane purchase deal is one of the bigger ones in recent times, IndiGo had placed larger orders in the past. At the 2005 Paris Air Show, IndiGo had struck a deal with Airbus for 100 A320 family aircraft for $6 billion. In 2011, IndiGo signed a pact for 180 A320 aircraft worth more than $15 billion.

Air India, too, had placed a huge order with Boeing for 111 aircraft for about $10 billion.

According to the Centre for Asia Pacific Aviation, Indian airlines are expected to order as many as 400 aircraft in 2014.

Why Boeing’s MAX

Boeing claims the 737 MAX aircraft are 14 per cent more fuel-efficient. Keskar said the order was a tremendous endorsement for the 737 MAX’s fuel efficiency.

According to analysts, the B737 Max is cheaper to operate because of its fuel efficiency; its operating cost is 8 per cent lower than competitor Airbus’s A320Neo.

Boeing has so far received more than 1,800 orders for the 737 MAX planes.

Narayanan said delivery of the new jets would begin in 2018. Payments will be made closer to the delivery date, he said, but declined to give details of the funding plans.

Narayanan further said some payments would be adjusted against the 12 Boeing 737 NG planes from an ongoing order SpiceJet would be swapping for the 737 MAX.

With today’s announcement, SpiceJet has ordered 90 planes directly from Boeing, which includes the 737-800, the 737-900ER and the 737 MAX. SpiceJet has so far taken delivery of 31 planes.

After surging 7.49 per cent to Rs 15.20 in intra-day trade, the SpiceJet scrip closed at Rs 14.61, up 3.32 per cent, on the Bombay Stock Exchange.

With inputs from Delhi bureau and agencies