November 30, 2015 TnH Global

SpiceJet to choose between Airbus and Boeing for plane order

SpiceJet is in talks with Boeing and Airbus to buy more than 150 planes, the airline’s chairman said on Sunday, predicting he would decide which manufacturer to place the order with by the end of March 2016. Such an investment would cap a remarkable turnaround for India’s second-biggest budget airline by market share, which came close to collapse late last year after running out of cash.

Co-founder Ajay Singh subsequently bought back into the airline, acquiring a controlling stake. SpiceJet has reported profits in the past three quarters, having made losses in the five preceding quarters. Singh now wants to more than quadruple the carrier’s fleet from 41 aircraft at present.

“We are in the process of placing a large aircraft order; the airline will order in excess of 150 planes – we hope to do that in this financial year,” SpiceJet’s chairman and managing director Singh told a news conference in Dubai. Its financial year will end in March.

“We’re looking at both Airbus and Boeing. The (Boeing 737) Max aircraft as well as the (Airbus A320) Neo. We have received offers from both of them,” Singh told Reuters. He said the order would be with a single manufacturer, declining to estimate the likely value of the deal because negotiations were ongoing.

The airline is generating enough money to pay for the order, but may also use “various forms of credit financing” should there be any shortfall, he said, ruling out diluting its equity to help buy the planes. SpiceJet also has what Singh described as a “regional aircraft business” servicing India’s smaller cities through a fleet of 14 Bombardier planes.

The airline is in talks with Toronto-listed Bombardier , France’s ATR – a joint venture between Airbus and Finmeccanica – and Brazil’s Embraer to potentially buy a further 50 planes to service this sector, said Singh.

Earlier this month, SpiceJet reported a small net profit for the July-September period, helped by sliding fuel costs. “The company is looking in healthy shape,” Sigh added. “It’s generating cash, it’s profitable. If oil prices remain moderate, (there is) no reason why this profitability shouldn’t continue for the coming quarters.”