New Delhi: Low-cost carrier SpiceJet is buying 155 planes from Boeing in a deal potentially worth $22 billion or 1.5 lakh crores, including about 40 that were ordered earlier.
- SpiceJet to buy 155 planes from Boeing for almost 1.5 lakh crore
- Deal is a big indicator of how far SpiceJet has come since 2014
- Very clear we won't have a repeat of Kingfisher experience: SpiceJet
The deal is a big and expensive indicator of how far SpiceJet has travelled from December 2014, when it was staring at collapse. "There was a time when most of you would ask when is SpiceJet closing down! Now for seven consecutive quarters, we are making profits. We are the number one airline in terms of on-time performance (OTP) and it has been an incredible journey for us," says Ajay Singh, the man who turned around SpiceJet after taking over from media baron Kalanidhi Maran in January 2015.
When Mr Maran was owner, 42 Boeing narrow-body planes were ordered by SpiceJet in 2014. But the combined force of mounting losses, unpaid fuel bills and airport charges, and unpaid salaries placed the deal on ice.
"My team has done a calculation and it shows that we have had the airline for 680 days. And for every single day, we have made a profit of 1 crore whereas the airline was losing 3 crore every day," said Mr Singh, adding, "We are very careful with our finances."
In addition to the 155 planes that have been ordered, SpiceJet has the option to order another 50 which will be wide-body. The delivery of these planes will start late in 2018 and continue until 2024. Vijay Mallya, the flamboyant owner of Kingfisher Airlines, had ordered nearly 40 Airbus planes including its famous Dreamliner A380, only to shut down the carrier five years later, seeped in debt.
When asked if SpiceJet is worried about going too big too soon, Mr Singh said, "We are very clear that we won't have a repeat of the Kingfisher experience. There are many options to fund our expansion plans. Right now, the environment globally is very good to get finances or sell your planes to lessors and lease them back. Whatever we do, we will be careful with our finances."