Published: Tue, January 17, 2017
Economy | By Melissa Porter

SpiceJet strikes Rs 1.5 L cr deal with Boeing

SpiceJet strikes Rs 1.5 L cr deal with Boeing

Indian airline SpiceJet has signed a deal to purchase up to 205 airplanes from USA manufacturer Boeing, the company announced Friday.

A joint statement by the two companies Friday said the planes booked at the end of 2016 include 100 new Boeing 737 MAX 8s, 42 MAXs, 13 additional 737 MAXs as well as purchase rights for 50 additional planes.

"Our turnaround story has been one which has very few parallels in the world today and we are proud of it", SpiceJet chairman Ajay Singh said.

The deal is a welcome boost for Boeing in India, where SpiceJet is the U.S. company's only major customer among the budget carriers now dominating the airline industry.

"With the next generation of 737 and the 737 MAX we are sure that we can be competitive and grow profitably", Singh said in a statement.

SpiceJet is India's fourth-largest airline by number of passengers carried with a market share of 12.9 percent. Meanwhile Boeing estimates India will need 1,850 new aircraft worth United States $265 billion by 2036 to meet demand for air travel. A source familiar with the deal said that SpiceJet was set to announce an order for as many as 100 new planes.

The order, with a list price of $11 billion, is worth an estimated $5.08 billion based on market pricing data from aircraft-valuation firm Avitas. When asked about 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.

Meanwhile, Indian company SpiceJet secured the option to acquire another 50 aircraft, including large jets for long-haul flights.

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