SpiceJet orders 100 Boeing planes valued at $22bn

Bloomberg

Boeing Co. won a $22 billion deal from budget carrier SpiceJet Ltd., notching the planemaker’s largest-ever order from an Indian airline and strengthening its hold in a market dominated by Europe’s Airbus Group SE.
The order includes 100 of Boeing’s 737 Max single-aisle jets and renegotiated terms for 55 previously ordered aircraft, SpiceJet said in a statement. The airline also has options to purchase another 50 Boeing aircraft, including the 777 and 787 Dreamliner wide-bodies.
The commitment, which was included in Boeing’s 2016 order tally, comes as the Chicago-based planemaker races to catch Airbus in narrow-body sales, the largest source of profit for the companies. The deal for the Max, which competes with Airbus’s A320neo workhorse, also helps Boeing widen its footprint in the fast-growing South Asian market. Most of SpiceJet’s low-cost rivals fly the European company’s aircraft.
“India is an important market both Airbus and Boeing can’t ignore,” said Shukor Yusof, founder of aviation consulting firm Endau Analytics. The SpiceJet order gives Boeing “a lifeline. There’s a lot more to grow in India than other parts of Asia.”
Rapidly expanding Indian carriers will need 1,850 new planes valued at $265 billion in 20 years, according to a Boeing forecast. Single-aisle planes will make up the bulk of the new deliveries.
The Asia-Pacific region, which is eclipsing North America as the world’s largest aircraft market, will need 15,130 new aircraft valued at $2.3 trillion in the next 20 years, as economic growth boosts middle-class travel, according to Boeing. That represents 38 percent of the global requirement.

Extending Reach
The deal adds to the 348 jetliner sales garnered by the US planemaker in India. SpiceJet, which is based in Gurgaon near New Delhi, and AirIndia Express are the only budget carriers to use Boeing aircraft in the country.
SpiceJet shares climbed 2.5 percent to 65.50 rupees in Mumbai. Boeing rose less than 1 percent to $159.02 at 9:55 a.m. in New York.
The airline placed firm orders for 100 737 Max 8 aircraft, with a cumulative list price of $11 billion, before the discounts that are customary for large customers. Bloomberg News reported on January 6 that the carrier was close to signing a deal for at least 92 planes valued at $10.1 billion and that the total could rise based on negotiations for discounts and service contracts.
“We spent a considerable amount of time negotiating and finalizing the commercial terms, including maintenance of the aircraft,” Chairman Ajay Singh said in an interview. “It was important for us to get all the commercial terms right.”
Deliveries will begin in July 2018 and continue through 2024. The carrier and Boeing also discussed a proposed stretch of the largest Max, Singh told reporters. The so-called 10X, Boeing’s response to Airbus’s fast-selling A321neo, would be available in 2020 and seat as many as 230 travelers.
The order signals a resurgence for SpiceJet after it almost collapsed more than two years ago. The expansion also sets up sharpened competition against IndiGo, operated by InterGlobe Aviation Ltd., which has about 400 Airbus aircraft awaiting delivery. IndiGo dominates the world’s fastest-growing major aviation market, with a 42 percent share. SpiceJet has 13 percent. A representative for Airbus declined to
comment.
The world’s two biggest planemakers are vying to serve a crucial market with an emerging middle-class that is flying for the first time and where passenger traffic is growing at twice the pace of nearest rival China.
While the growth is prompting India airlines to order planes, they also have to contend with airport infrastructure that hasn’t kept pace. Limited landing and parking slots extend the time circling above airports such as Mumbai during peak hours, wasting fuel.