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SpiceJet Orders 42 Boeing 737MAX

: Mar 14, 2014 - : 10:02 pm

Indian low-cost airline SpiceJet has ordered 42 Boeing 737 MAX 8s aircraft, worth $4.4 billion, as part of its plans to modernize the fleet and get a potential investor.
The country’s second largest low-cost carrier by market share expects to start taking delivery of the aircraft from 2018.
“We will fund the acquisition through sale and leaseback mode,” says S.L. Narayanan, group chief financial officer at Sun Group, the parent company of SpiceJet, soon after signing the deal at the ongoing India Aviation air show in southern city of Hyderabad.
Payments for the order will be closer to the delivery date, he adds.
SpiceJet plans to pay part of the payments for the latest order by adjusting against the 12 Boeing 737 NG airplanes, which it plans to swap for 737 MAX.
“We have decided to swap 12 Boeing 737 NG airplanes from an ongoing order for 31 such aircraft to purchase 42 Boeing 737 MAX,” Narayanan tells Asian Airlines and Airports.
The cash-strapped SpiceJet is also eyeing potential international investors to revive its fortunes after India relaxed restrictions on investment by foreign airlines. A SpiceJet official had told Asian Airlines and Airports recently that the airline was approached by certain potential investors from the airline industry in middle-east and south east Asian countries, but didn’t name any.”
According to aviation observers, the airline will be more attractive to potential investors once it gets the new aircraft.
“The induction of Boeing 737 MAX will further modernize our fleet, improve customer experience, and ensure that we operate the most efficient fleet well into the future,” he adds.
Boeing’s next-generation 737 aircraft have been the mainstay of the fleet ever since SpiceJet started operations.
“In this business if you don’t plan for your fleet well in advance, when you need capacity airplanes won’t be available,” Narayanan says.
Asked why SpiceJet has chosen Boeing aircraft, he adds, “We have been with Boeing right through and this 189-seater aircraft is a very fuel efficient aircraft. They are also the optimum size for us in terms of meeting our requirements.”
 “The new order for more Boeing aircraft has vindicated our choice by their endurance, reliability and cost effectiveness,” Narayanan says.
The 737 MAX incorporates the latest-technology CFM International LEAP-1B engines to deliver the highest efficiency, reliability and passenger comfort in the single-aisle market.
“The order is a tremendous endorsement of the 737 MAX’s unsurpassed fuel efficiency,” says Dinesh Keskar, senior vice president of Asia Pacific and India Sales, Boeing Commercial Airplanes.
“The capabilities of the 737 MAX supports SpiceJet’s mission to become India’s preferred low-cost airline. We are very proud to be partners with SpiceJet and a part of the airline’s continued success with the addition of the 737 MAX,” Keskar says.
Boeing says the development of the 737 MAX is on schedule with firm configuration of the airplane achieved in July 2013. The first flight is scheduled in 2016 with deliveries to customers beginning in 2017.
“Already a market success, the 737 MAX has accumulated more than 1,800 orders to date and will have 8% lower per-seat operating costs than the future competition,” Keskar says.
With the latest order, SpiceJet has ordered 90 airplanes directly from Boeing, which includes the 737-800, 737-900ER and now the 737 MAX. To date, SpiceJet has taken delivery of 31 of the airplanes.
Boeing’s 737 MAX aircraft offer fuel savings compared to SpiceJet’s existing fleet of current-generation Boeing 737s.
“This is a critical acquisition for SpiceJet as it will save at least 14% jet fuel cost,” says Keskar.
SpiceJet reported a quarterly loss in February, hit by high fuel costs and a weak local currency, and industry consultancy the Center for Asia Pacific Aviation estimates it is on course to stories its biggest-ever annual loss.

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