A SpiceJet Boeing 737-800 aircraft taxis on the tarmac after landing at Chhatrapati Shivaji international airport in Mumbai November 26, 2012. REUTERS/Danish Siddiqui
January 12, 2017
By Anshuman Daga and Tommy Wilkes
SINGAPORE/NEW DELHI (Reuters) – India’s SpiceJet <SPJT.BO> is set to seal an order for at least 90 new 737 jets from Boeing <BA.N>, two sources said on Thursday, as the low-cost carrier targets an expansion to tap into the South Asian nation’s booming air travel market.
The announcement for the 737 MAX aircraft – which includes at least 42 of the narrowbody jets SpiceJet had previously agreed to buy from Boeing in 2014 – is expected as early as Friday when SpiceJet’s chairman holds a press event in New Delhi, the sources, who were familiar with the matter, said.
One of the sources said the SpiceJet order could be for as many as 100 new planes. Boeing last week posted an order for 100 737 MAX jets from an unidentified customer.
The sources declined to be identified ahead of Friday’s press announcement.
An agreement with SpiceJet, which has a current fleet of 40 planes, would be a much-needed boost for Boeing in India, as its rival Airbus <AIR.PA> has won record-sized orders with InterGlobe Aviation’s <INGL.NS> IndiGo, India’s biggest budget airline, as well as a recent deal with GoAir.
SpiceJet and Boeing did not respond to requests for comment.
India is the world’s fastest growing aviation market and among the most attractive for planemakers seeking a new wave of growth. Indian passenger numbers are increasing by more than 20 percent annually thanks to low prices and rising disposable incomes.
SpiceJet has been in talks with Boeing and Airbus since 2015, and it is expected to have secured a discount from the roughly $10 billion cost of 90 737 MAX jets based on list prices. Airlines typically get discounts from list prices when placing large orders.
Under chairman Ajay Singh, SpiceJet has been rebuilding its business since almost collapsing after running out of cash in late 2014.
The airline has grown its market share and returned to profitability but it remains far smaller than market leader IndiGo.
Despite soaring passenger numbers, Indian carriers have struggled to achieve consistent profitability because of fierce competition, regular price wars and high operating costs.
(Reporting by Anshuman Daga and Tommy Wilkes; Editing by Tom Hogue and Muralikumar Anantharaman)