SpiceJet plans $900 mln aircraft buy for expansion

Wednesday, 3 November 2010 02:08 - - {{hitsCtrl.values.hits}}

NEW DELHI (Reuters) - Indian budget carrier SpiceJet <SPJT.BO> plans to spend as much as $900 million to purchase 30 Nextgen turboprop aircraft from Canada's Bombardier Inc <BBDb.TO>, Chief Executive Neil Mills said on Tuesday.

The deliveries will commence from the second quarter of 2011 and the firm will initially purchase 15 Bombardier aircraft for $450 million, Mills said. SpiceJet will use the additional fleet to enhance regional connectivity in the country.

"We see a huge opportunity in regional connectivity. We can tap tier 2 and tier 3 cities," Mills said.

SpiceJet plans to double its fleet from the current 22 aircraft by end 2013, it said in a statement.

As of 30 September, SpiceJet had a positive networth and over 6 billion rupees in cash, Mills said. He did not elaborate on how SpiceJet would fund the purchase of Bombardier aircraft.

SpiceJet had been looking to raise $75 million through a share sale earlier this year but that plan was put on hold after Sun TV founder Kalanithi Maran agreed to buy a stake in the firm.

In June, Maran and Kal Airways had agreed to buy 37.7 percent in the carrier from U.S. investor Wilbur Ross and Royal Holdings Services, held by the Kansagra family, for 7.39 billion rupees at 47.25 rupees a share.

Maran has so far raised stake in the carrier to about 31 percent.

SpiceJet has also ordered 30 Boeing aircraft worth $2.7 billion for delivery from 2014. It launched international services to Nepal and Sri Lanka in October.

"We are entering international markets where there are no low-cost carriers. We see that as a phenomenal growth opportunity," Chief Commercial Officer Samyukth Sridharan said.

The Indian aviation sector is bouncing back with domestic passenger traffic growing 18.5 percent in January-September.

Earlier on Tuesday, SpiceJet swung to a net profit of 101.1 million rupees in July-September compared with a net loss of just over 1 billion rupees as higher passenger traffic and yields helped drive sales.

"Yields moved up and stabilised — an indication that capacity addition of 9 percent continued to lag behind demand growth," SpiceJet said in the statement, adding passenger traffic for July-September grew 16 percent.