Spicejet grounded, no Boeing impact seen

Indian airline Spicejet, which has been struggling financially, was grounded today when credit was withheld to buy fuel. The airline has eight Boeing 737-800s and 42 737-8s on order. The -800s are scheduled to be delivered next year; the MAXes are scheduled for delivery in 2018-2023 on a roughly even number per year in the earlier years.

There have been a number of stories hand-wringing over the adverse impact to Boeing. While no OEM likes to lose an order of this size, should Spicejet cease operations permanently, we don’t view this as having any impact on Boeing. The company is already strained to find delivery slots for the MAX, so this gives Boeing slots to resell. The eight -800s scheduled for delivery next year, being close-in, could be more problematic, but we have no doubt homes can be found for these airplanes without too much trouble.

The hand-wringing is unnecessary.

We view the airline’s difficulty as another example of the problematic Indian marketplace. The blog Flying Engineer follows the Indian market closely and checking out a number of its posts will paint a comprehensive picture of the Indian market. We view this market as highly risky, with Airbus having a much greater exposure than Boeing. AirAsia, a carrier on our Storm Warning Flag list, recently expanded to add a new subsidiary service in India, a move we question given an environment that is essentially hostile to airline operations.


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