Uncertainty Continues Over the Return of MAX Planes to Operations: SpiceJet

SpiceJet has said it is incurring various costs related to the grounded Boeing 737 MAX aircraft and that uncertainty continues over the timing of the return of these planes to operations. The no-frills airline has grounded 13 MAX aircraft. Globally, these planes have been grounded since March this year following regulatory directives in the wake of two crashes involving the aircraft. “The company’s fleet of thirteen MAX aircraft continues to be grounded and despite its inability to undertake revenue operations, the company continues to incur various costs with respect to MAX aircraft,” SpiceJet said in its annual report for 2018-19.

The Directorate General of Civil Aviation (DGCA) and other civil aviation authorities decided to suspend operations of MAX aircraft after the crashes involving the planes of Lion Air and Ethiopian Airlines in October 2018 and March 2019, respectively. “There continues to be uncertainty in the timing of the return to operations of MAX aircraft and the company continues to work with the aircraft manufacturer to address the above, including seeking reimbursement of ascertained costs and losses based on its assessment,” the report said.

In 2016-17, the airline placed an order for up to 205 MAX aircraft, including firm order for 155 such planes. Last fiscal, the airline inducted 18 new planes, including 13 Boeing 737-8 MAX aircraft and five 90-seater Q400s. In April and May 2019, the carrier inducted 26 new aircraft, including 22 Boeing 737 and 4 Q400s, according to the report. The airline said it is optimistic about the strong performance in the coming year on the back of massive fleet expansion, favourable operating environment, likely return of grounded Boeing 737 MAX aircraft by the end of the calendar year 2019 and securing favourable slots at key airports.

“SpiceJet has been keeping stringent control on costs. The fuel-efficient Boeing 737 MAX aircraft will result in cost savings of 12-14 per cent per aircraft and Q400 will increase the seating capacity from 78 to 90. The next financial year will see an increase in its revenue profile due to introduction of substantial Mumbai-based flights, additional lucrative international flights to Hongkong, Bangkok, Dubai, Jeddah, Riyadh, Dhaka from Mumbai and Delhi,” the report said. The airline is scheduled to hold its annual general meeting on September 30.