SpiceJet places $2.7 billion orders with Boeing

27 Jul 2010
SpiceJet is eyeing a mega fleet expansion to take part in the aviation growth story in the coming years. The Gurgaon-based airline, which was recently acquired by Kalanithi Maran’s Sun Group, has placed a $2.7 billion order with Boeing for delivery of 30 new 737-800 aircraft beginning 2014. The deliveries should be completed in five years.

According to Boeing’s own estimates, the Indian aviation market should grow by 60% between now and 2014 to 80 million passengers, and SpiceJet is looking for a large share of this growth story.

Ajay Singh, a director on the SpiceJet board, says low-cost airlines today account for almost 70% of the domestic market and “I wont be surprised if this figure reached 80% by 2014…..SpiceJet is looking to take a disproportionate share of the growth in the aviation sector for the next few years”.

Singh said that, between now and 2014, the carrier’s fleet will more than double to 50 aircraft (from 21 now). All the aircraft at present are on lease from Boeing and the airline is looking to lease at least 15 more over the next two years.

It is pertinent to note here that SpiceJet’s closest competitor, IndiGo, plans to order 150 new aircraft beginning 2015, by when its fleet size would have already reached a 100 aircraft.

SpiceJet’s interim CEO Kishore Gupta said the airline is cash rich, with cash reserves in excess of $125 million on its books now. He declined to divulge the funding plan for raising $2.7 billion needed to buy new aircraft, saying this decision was a long way off since deliveries will begin only four years from now.

SpiceJet operates a fleet of 21 Boeing 737-800s with a single seat configuration across domestic routes. Gupta said international operations will begin late September to Dhaka, Male and Kahthmandu even as the company awaits government nod for flying to and from Colombo.

Singh made it clear that despite mega expansion being planned for the next few years, the airline has no plans to change its low-cost model and would continue to operate single configuration, narrow body aircraft on domestic as well as international routes.

Source: DNA India