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SpiceJet looking to order 20 planes as rates head south

SpiceJet looking to order 20 planes as rates head south
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First Published: Wed, Apr 08 2009. 09 40 PM IST

Future requirement: SpiceJet aircraft at IGI airport in New Delhi. SpiceJet’s chief executive officer Sanjay Aggarwal said that the firm is beginning to think about aircraft orders beyond 2012. Ramesh
Future requirement: SpiceJet aircraft at IGI airport in New Delhi. SpiceJet’s chief executive officer Sanjay Aggarwal said that the firm is beginning to think about aircraft orders beyond 2012. Ramesh
Updated: Wed, Apr 08 2009. 09 40 PM IST
Mumbai: In the midst of one of the most turbulent phases of the Indian aviation industry, which is expected to post a loss of $2 billion (Rs10,040 crore) in the fiscal ended 31 March, Gurgaon-based private carrier SpiceJet Ltd is looking to place orders for at least 20 planes. Delivery of these planes is projected to be around 2012, just in time for the firm’s expansion plans.
Future requirement: SpiceJet aircraft at IGI airport in New Delhi. SpiceJet’s chief executive officer Sanjay Aggarwal said that the firm is beginning to think about aircraft orders beyond 2012. Ramesh Pathania / Mint
Under consideration is Boeing Co.’s 737-900 Extra Range, or ER, planes that can be used to fly as far as west and South-East Asia, according to a senior SpiceJet executive, who did not want to be identified. Airlines in India have to fly at least five years on domestic routes before they are eligible to fly overseas; SpiceJet fulfils that requirement in May 2010.
While the carrier’s current 19-strong fleet is all-Boeing, it is also in talks with European airplane maker Airbus SAS, another senior executive with the airline said. He, too, declined to be identified because the purchase talks are at a preliminary stage.
“We are speaking to various aircraft manufacturers for acquiring aircraft for future requirement. The idea is to get the best deal out of it. But the talks are in very premature stage and aircraft acquisition is not going to be imminent,” the first executive said. “The logic is that we will get slots for airplanes at much cheaper price compared to a year or two years ago. Secondly, we need to think about the capacity requirements beyond 2012. The scene is not going to continue like this and we may plan for international operations shortly.”
Using the existing fleet—Boeing 737-800 and 737-900ER planes—as a benchmark, 20 new planes would cost SpiceJet at least $1.5 billion (Rs7,530 crore). According to the Boeing website, these planes have a list price of between $76 million (Rs381.5 crore) and $87 million. (Rs436.7 crore)
There are no firm orders from SpiceJet or other carriers, Boeing’s India head said. “We are always talking to our clients—SpiceJet, Jet Airways and Air India. This is not only for further orders but also to support their existing operations in India,” Dinesh Keskar, Boeing International’s vice president and Boeing India’s president told Mint.
A spokesperson representing Airbus said there was no discussion with SpiceJet.
On Friday, SpiceJet’s chief executive officer Sanjay Aggarwal had said that the firm is beginning to think about aircraft orders beyond 2012. However, he said no decision has been taken about the number of the planes or details of aircraft acquisition.
An aviation industry analyst with a Mumbai-based international consulting firm, said placing orders for planes now made sense given that demand was weak for aircraft and booking slots for future deliveries were available at much cheaper prices.
“Carriers will only need to give a small amount as advance for these planes. Globally, aircraft manufacturers are facing cancellation orders and deferment requests from their clients,” the analyst, who is not authorised to speak to media, said on condition of anonymity.
The airline, which counts a fund run by US billionaire Wilbur Ross as one of its backers, operates 117 flights daily to 18 cities. It has claimed, for the month of February, a 12.4% market share by domestic passengers handled. Data for March has not been released yet.
At the end of February, Aggarwal had said that SpiceJet is examining the possibility of setting up a so-called feeder airline that would operate flights to smaller cities and that it has commissioned a study to evaluate its feasibility.
If it does opt for such operations, the carrier would need 50-90 seater planes for those routes. Most such planes are made by Brazil’s Brasileira de Aeronáutica SA, better known as Embraer, Canada’s Bombardier Inc. and French turboprop maker ATR.
On 30 March, Mint had reported that carriers in India have retracted at least a third of the orders they had placed and which were due for delivery this year, according to an analysis by Boeing.
The report also showed that Boeing, Airbus and Embraer expect to deliver some 57 aircraft to India this year, down from the 91 projected in mid-2008.
Shares of SpiceJet rose 7.74% on the Bombay Stock Exchange or BSE on Wednesday to close at Rs15.45 each on a day the benchmark index Sensex grew 1.97%.
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First Published: Wed, Apr 08 2009. 09 40 PM IST