SpiceJet inducts two Airbus aircraft amid worries over 737 Max
Regulators worldwide have grounded the Boeing 737 MAX aircraft, following two fatal crashesSpiceJet had ordered as many as 205 of these planes in 2017, of which 13 have been delivered
MUMBAI : Budget airline SpiceJet Ltd on Monday said it has added two Airbus A320 aircraft to its fleet, amid uncertainty over its ability to resume operations with Boeing 737 MAX aircraft anytime soon.
Regulators worldwide have grounded the Boeing 737 MAX aircraft, following two fatal crashes that raised safety concerns.
SpiceJet had ordered as many as 205 of these planes in 2017, of which 13 have been delivered. The planes are, however, grounded because of the ongoing safety review by the US Federal Aviation Administration.
Gurugram-headquartered SpiceJet, which predominantly flies a Boeing 737 aircraft fleet, inducted Airbus A320 aircraft on wet lease effective 14 February from BH Air, a Bulgarian-registered airline based in Sofia, the airline said. This is a significant departure from industry practice as budget airlines around the world prefer to operate a fleet with one type of aircraft to keep costs down. SpiceJet had followed this practice till the end of the December quarter, when it had 119 aircraft, including 82 Boeing 737s, 32 Bombardier Q 400s, and five Boeing 737 freighters.
Boeing said on 20 January that it expects the 737 MAX to return to service by mid-2020. The aircraft maker has not been able to deliver around 400 Max planes it built since grounding began in March.
The grounding of the Boeing 737 MAX, which was designed to deliver 12-15% lower fuel burn and 10% lower maintenance cost, has hurt SpiceJet’s financial health.
SpiceJet, India’s second-largest budget airline by market share, reported a consolidated net profit of ₹77.97 crore in the December quarter, an increase of 21% from ₹64.44 crore in the year-ago period. It had reported a loss of ₹461 crore in the September quarter. The net profit, however, was largely because of a jump in other income or an ‘interim offer’ from Boeing Co. to compensate SpiceJet for costs incurred because of the grounding of 13 Boeing 737MAX aircraft.
The expense for grounding the planes for the nine-month period ended December 2019 was ₹537.27 crore, including ₹246.42 crore for Q3, according to SpiceJet’s estimates. As such, if the airline had not recognized such other income, it would have reported a loss of ₹173.19 crore for the December quarter. Boeing is yet to release the compensation amount.
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