Two years ago, India’s fourth-largest airline by market share, SpiceJet, was about to shut shop.
The budget carrier had been making losses for three straight years and its creditors were lining up to recover dues. The company was even forced to ground its aircraft for a few days after retailers refused to supply fuel, citing past dues.
But, the once-beleaguered airline has registered a remarkable turnaround since then.
On Jan. 06, Bloomberg reported that SpiceJet is all set to order 92 jetliners from Boeing, worth $10.1 billion (Rs 68,000 crore). The deal includes an order of at least 50 new Boeing 737 Max airplanes—a narrow-bodied model— and renegotiated conditions for another 42 Boeing 737 jets that the company had ordered in 2014.
“The airline may boost the total (order) if final talks yield bigger discounts and favorable maintenance contracts,” Bloomberg reported, quoting an unnamed source. “We expect to complete these negotiations and place the order this financial year,” SpiceJet told Bloomberg.
SpiceJet’s decision to aggressively pursue new orders comes at a time when India’s airline companies are finally making profits after several years of gloom. In 2016, all three of India’s publicly-listed airlines—Jet Airways, IndiGo, and SpiceJet—recorded substantial profits. GoAir, a privately-held company, was also believed to have raked in over $20 million in profits during fiscal 2016, while Air India recorded operational profits for the first time in nine years.
For SpiceJet, the turnaround was the result of many months spent recalibrating its strategy.
“We stuck to the very basics of operating a low-cost carrier—a two-pronged strategy of reducing cost and maximising revenues,” a SpiceJet spokesperson had explained to Quartz in 2015. That year, SpiceJet had emerged as the world’s best performing airline stock after the company’s share price soared by 340%, the highest for any airline in the world for that period.
SpiceJet isn’t the only Indian airline expanding its fleet. For instance, the country’s largest airline by market share, IndiGo, has finalised orders for 250 carriers from Airbus, and Air India, the government-controlled airline, is set to add 35 new jets to its fleet this year. Other domestic airlines, including Go Air and Vistara, are also lining up plans to increase their fleet sizes.
“Last year represented a turnaround in the fortunes of India’s aviation industry after several very difficult years,” consultancy firm CAPA said in a statement. ”Lower fuel prices combined with modest capacity growth and strengthening economic fundamentals were largely responsible for surging traffic and an improvement in airline financials in fiscal 2016. Domestic traffic was up 21.2%.”