SpiceJet hopes to place large aircraft order this fiscal

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Mumbai: India’s second largest low fare airline SpiceJet Ltd is close to placing a “significant” aircraft order, the airline’s top executive said.

“We are talking to aircraft manufacturers—both Boeing Co and Airbus SAS—for placing a order of significant size. We have communicated our quotes to them and we have their responses too,” Ajay Singh, chairman and managing director, SpiceJet said.

“We are evaluating the responses. We want to place order as soon as possible, preferably this financial year. But we need to get the terms and conditions right,” Singh said.

He said the airline is also talking to airplane makers including Bombardier of Canada, Embraer of Brazil and ATR of Europe for smaller planes to connect regional airports.

Boeing and Airbus make narrow body and wide body planes.

Last month, SpiceJet reported a fourth consecutive quarterly profit for the three months ended 31 December as it managed to fill more seats and benefited from cheaper fuel.

On 5 December 2014, the aviation regulator asked the airline, then owned by media baron Kalanithi Maran, to stop ticket sales more than a month in advance. The move, meant to protect customers, ended up precipitating a crisis. The restriction choked one of SpiceJet’s last revenue sources. With oil companies refusing to fuel its planes unless cash was paid upfront, SpiceJet grounded all its planes on 16 December 2014.

On 2 January 2015, Singh, a co-founder of SpiceJet who had sold his stake in the airline in 2010, returned to buy a controlling stake from Maran.

SpiceJet’s fortunes have turned after the change of guard, aided by cheaper fuel. It posted a net profit of Rs.238.39 crore in the December quarter against a net loss of Rs.275.02 crore in the same quarter a year ago. Since 1 April 2015, the SpiceJet stock has surged over 291%.

Singh said the airline is profitable for several quarters and is generating cash. He said there is no urgent need of capital infusion even though the airline is evaluating options of raising equity and using unused bank loan limits.

Singh recalled that the current government had extended moral support during a tough time while managing disillusioned crew intact was the biggest challenge.

Singh said he could convince aircraft lessors as repossessing aircraft was a massive challenge from a bankrupt airline under Indian jurisdiction.

Singh also said the airline focused on increasing ancillary revenues to 17% at present from 7% in December 2014.

Kapil Kaul, chief executive officer (South Asia) at CAPA India said Singh had a hands-on approach in reviving SpiceJet. Kaul said the government was also instrumental in infusing life into SpiceJet.

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