SpiceJet inks lease pact with Nomura

Move may save company $2-4 million per aircraft.

SpiceJet today said it had signed a deal to sell 16 Boeing 737 aircraft for more than $1.1 billion to Nomura Babcock & Brown and lease them back again. The airline had entered into a similar agreement with the investment banker for its first four aircraft earlier this year.

The deal mirrors a growing trend in India's aviation sector as airlines, which are faced with rising oil prices and stiff competition, have taken to selling and leasing back aeroplanes to fund their expansion.

Typically, an airline can book as much as $2"�$4 million as profit by selling and leasing back each plane, according to estimates.

Deccan Aviation, another budget carrier, has closed deals for four Airbus A-320 planes, while the market leader, Jet Airways, sold and leased back five aircraft in April.

Together with today's announcement, SpiceJet has now completed the financing of its first 20 aircraft orders for Boeing 737-800/-900ER aircraft.

The agreement was signed between the airline and Babcock & Brown Aircraft Management (BBAM) along with its long-term strategic partner, Nomura Babcock & Brown.

The aircraft type is Boeing 737-800/-900ER. Their value is based on the manufacturers' list prices, according to a statement issued by SpiceJet. SpiceJet's chairman, Siddhanta Sharma, said the newly-acquired capacity would go a long way in augmenting the airline's network in the country.

Commenting on the deal, BBAM president Steve Zissis said the introduction of these aircraft, along with SpiceJet's low-cost business model, will improve its position in the Indian aviation market.