India’s biggest domestic carrier Jet Airways (India) Ltd agreed to buy 20 Boeing 737-800 aircraft for as much as $1.5 billion (Rs5,925 crore) based on list prices, to expand its reach in India and overseas.
The aircraft will be delivered between October 2012 and December 2014, Mumbai-based Jet said in a statement to the Bombay Stock Exchange (BSE) on Friday.
The company has also taken an option to acquire an additional 10 aircraft between August 2012 and February 2015, according to the statement.
“This is for deliveries from 2012, by that time several aircraft will need to be replaced. Some of the existing aircraft’s old lease will be over. So, it will partly go for replacement of those and some capacity addition,” said executive director for the airline Saroj Datta.
Jet Airways, Datta said, has already signed a purchase agreement with the manufacturer, though the company will decide on the funding of the aircraft later.
He said the company could choose a different version of the aircraft from the other 10 options in the 737 category. That decision would depend on the capacity requirement, Datta added.
Jet will start its flights to the West Asian market next year and will focus on international traffic through its hub in Brussels.
A Mumbai-based analyst, who did not want to be identified, said the airline’s order was not surprising considering the deliveries of aircraft from large aircraft manufacturers such as Airbus SAS and Boeing were not available before 2012.
“Jet is making plans for its growth post-2012. By that time, Kingfisher and IndiGo, which have big fleet orders, will be using most of their aircraft deliveries in the domestic market. In hindsight it was time Jet looked beyond.”
Jet bought Sahara Airlines Ltd in April in the country’s largest aviation takeover.
Shares of Jet have gained 52% this year, compared with the 29% rise in the benchmark sensitive index of BSE. The shares fell Rs9.15, or 1%, to Rs932.40 on Friday.
A 1% rise in India’s gross domestic product should translate into a 2% increase in air traffic, according to a June report by Ernst & Young Llp.
Tarun Shukla contributed to this story.