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India's SpiceJet places $4.4 billion order for 42 Boeing 737s

Employees work inside a travel agency office besides a model of a SpiceJet aircraft in the western Indian city of Ahmedabad February 14, 201
Employees work inside a travel agency office besides a model of a SpiceJet aircraft in the western Indian city of Ahmedabad February 14, 201

By Devidutta Tripathy

HYDERABAD (Reuters) - Indian budget airline SpiceJet Ltd has signed a deal with Boeing Co to buy 42 737 MAX jets in a deal worth $4.4 billion at list prices, the company said on Wednesday, sending its shares up more than 7 percent.

The order, which Reuters first reported in January, could help the loss-making Indian carrier, India's fourth-biggest airline by market share, as it seeks new investors.

Delivery of the new jets will begin in 2018, S.L. Narayanan, chief financial officer at SpiceJet's parent, Sun Group, told reporters at an Indian air show in southern city of Hyderabad.

Payments for the order will be closer to the delivery date, he said, declining to give further details on funding plans.

Narayanan said some payments for the latest order would be adjusted against the 12 Boeing 737 NG planes from an ongoing order SpiceJet will be swapping for 737 MAX.

SpiceJet, controlled by billionaire Kalanithi Maran's Sun Group, is seen as a target for investors after India relaxed restrictions on investment by foreign airlines. It has reported interest from potential investors but has not named any.

The long-awaited fleet renewal and the possible stake sale have become intertwined, industry sources have said, with the airline seen as potentially more attractive once it gets the new jets.

Like its domestic rivals, SpiceJet has been losing money on the back of costly fuel and a weak rupee and India's fourth-biggest airline by domestic market share has eyed new planes and new investments to revive its fortunes.

Shares in SpiceJet rose as much as 7.4 percent after the announcement, while the main Mumbai market index <.BSESN> was up 0.4 percent. Shares of its local rival, Jet Airways Ltd , were trading down 2.6 percent.

Boeing's 737 MAX aircraft offer fuel savings compared to SpiceJet's existing fleet of current-generation Boeing 737s, industry sources said in January.

SpiceJet reported a quarterly loss in February, hit by high fuel costs and a weak local currency, and industry consultancy the Centre for Asia Pacific Aviation estimates it is on course to post its biggest-ever annual loss.

(This story was refiled to correct typo in first paragraph)

(Writing by Tommy Wilkes; Editing by Matt Driskill)

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