After Boeing, Spicejet now spends $1.7 billion on Bombardier planes

Key highlights

• SpiceJet has placed an order for 50 Bombardier planes.
• The total investment is valued at $1.7 billion.
• On Monday SpiceJet said it will buy 40 Boeing planes for $4.74 billion.

Budget carrier SpiceJet on Tuesday announced its decision to spend $1.7 billion on 50 new planes from Bombardier Commercial Aircraft.

“The LOI (Letter of Intent) includes 25 Q400 turboprops and purchase rights on an additional 25 aircraft. Based on the Q400 turboprop list price, an order could be valued at up to US $ 1.7 billion,” the company said.

The planes, that are traditionally smaller than other planes and have just an 86 passenger model, will be used for travel between Tier-2 and Tier-3 cities.

“The Q400 is the largest turboprop aircraft available on the market and the 86-seat configuration will support SpiceJet develop its domestic operations from Tier-2 and Tier-3 cities across India,” said François Cognard, Vice President, Sales, South-Asia and Australasia.

“It is also a testament to the huge demand for air travel in the smaller towns and cities of India,” said RN Choubey, Secretary, Ministry of Civil Aviation, Government of India.

The announcement by SpiceJet came 15 minutes before markets could close and the company’s shares climbed 1.65% or up 2.05 points to end at Rs 126.60 per share.

On Monday the company announced the intent to buy 40 737 Max airplanes for an agreement valued at nearly $4.74 billion.

The company claimed that it operated a fleet of 35 Next-Generation 737s and 20 Bombardier Q400s.

“The airline currently operates 20 Q400 aircraft in a 78-seat configuration to domestic and international destinations. When concluded, this fleet expansion will provide SpiceJet the ability to grow profitably and leverage the robust demand forecast in the world’s fastest growing regional aviation market,” Spicejet said.