Boeing Co (NYSE:BA) In Talks With India’s SpiceJet

Re-bouncing from its loss-making hiatus only a year earlier, SpiceJet is on fleet expansion spree. Talks for the purchase of more than 100 single-aisle jets worth $11 billion at list prices are on between the Indian carrier, Boeing Co (NYSE:BA), and Airbus Group SE.

Cueing on what would be the largest ever plane order made by the Indian budget airlines, the stocks of the company rose by 5.6 percent racing to INR 28.10, the highest intraday level in two years.

Co-founder and Chairman Ajay Singh stated in an interview that the discussions for the Airbus A320Neo and Boeing 737 Max aircraft were on and that a deal could be during the current financial year. He stated that the order would be for more than 100 planes and the investments would be made at the time of the order depending upon the volume of the planes and their price. The investment due in SpiceJet would be in the form of debt or new shares as stated by CFO Kiran Koteshwar.

Currently SpiceJet flies 2 Airbus planes and 18 Boeing 737 jets and this would be the first purchase from the French company. Other carriers such as IndiGo, AirAsia and Singapore Airlines Ltd fly only Airbus jets. There is a growing demand for new aircrafts as more and more people are flying. Last year, Boeing Co (NYSE:BA) had forecasted that India needs 1,600 new planes valued at $205 billion in the next two decades.

Whether the talks materialize into a deal is yet to be seen because similar talks and agreement between IndiGo and Airbus in October 2014 for 250 A320 Neo planes is yet to see light. The final deal between the two companies has not been signed although they are still in talks.

SpiceJet’s posting a positive second quarter is very encouraging as the company had ran into financial trouble last year and was on the verge of shutting down. However, under the able-guidance of Singh, the company bounced back and posted two consecutive quarters of profit. Last year, it ordered 42 737 Max planes that were valued at $4.4 billion. These are upgraded version of the single aisle 737 sporting more efficient engines.

The Boeing Company, incorporated on July 19, 1934, together with its subsidiaries, is an aerospace company. The Company operates through five segments: Commercial Airplanes, Boeing Military Aircraft (BMA), Network & Space Systems (N&SS), Global Services & Support (GS&S) and Boeing Capital (BCC). The Company’s Defense, Space & Security (BDS) business comprises three segments: BMA, N&SS and GS&S. BDS operations principally involve research, development, production, modification and support of the products and related systems. In addition, the Company includes the services of Engineering, Operations & Technology (EO&T) and Shared Services Group (SSG). EO&T provides Boeing with technical and functional capabilities, including information technology, research and development, test and evaluation, technology strategy development, environmental remediation management and intellectual property management.

Commercial Airplanes Segment

The Commercial Airplanes segment develops, produces and markets commercial jet aircraft and provides related support services, principally to the commercial airline industry across the world. The Company is a producer of commercial aircraft and offers a family of commercial jetliners designed to meet a range of global passenger and cargo requirements of airlines. This family of commercial jet aircraft in production includes the 737 narrow-body model and the 747, 767, 777 and 787 wide-body models. The Commercial Airplanes segment also offers aviation services support, aircraft modifications, spare parts, training, maintenance documents and technical advice to commercial and government customers worldwide.

Boeing Military Aircraft Segment

The Boeing Military Aircraft segment is engaged in the research, development, production and modification of manned and unmanned military aircraft and weapons systems for global strike, including fighter aircraft and missile systems; vertical lift, including rotorcraft and tilt-rotor aircraft; unmanned airborne systems programs; and mobility, surveillance and engagement, including command and control, battle management, airborne, anti-submarine, transport and tanker aircraft. This segment’s programs for global strike include EA-18G Growler Airborne Electronic Attack, F/A-18E/F Super Hornet, F-15 Strike Eagle and Joint Direct Attack Munition; for vertical lift include CH-47 Chinook, AH-64 Apache and V-22 Osprey; for unmanned airborne systems programs include ScanEagle, and for mobility, surveillance and engagement include C-17 Globemaster III, P-8A Poseidon, India P-8I and KC-46A Tanker.

Network & Space Systems Segment

The Network & Space Systems segment is engaged in the research, development, production and modification of the products and related services, which includes electronics and information solutions, including command, control, communications, computers, intelligence, surveillance and reconnaissance (C4ISR), cyber and information solutions, and intelligence systems; strategic missile and defense systems; space and intelligence systems, including satellites and commercial satellite launch vehicles, and space exploration. This segment’s programs for strategic missile and defense systems include Ground-based Midcourse Defense (GMD); for space and intelligence systems include commercial, civil and military satellites, and for space exploration include Space Launch System (SLS), Commercial Crew and International Space Station. This segment also includes the Company’s joint venture operations related to United Launch Alliance.

Global Services & Support

The Global Services & Support segment provides a range of support solutions. Its global services business offers various products and services through integrated logistics, including supply chain management and engineering support; maintenance, modification and upgrades for aircraft, and training systems and government services, including pilot and maintenance training. GS&S international operations include Boeing Defence U.K. Ltd., and Boeing Defence Australia, as well as joint ventures, Alsalam Aircraft Company, Aviation Training International, Ltd and Boeing Sikorsky International Services LLC. Integrated logistics comprises an integrated array of services that address the life cycle of aircraft and systems. Its programs include the F/A-18E/F support program and domestic and international performance based logistic programs for the AH-64 Apache, CH-47 Chinook and other BDS platforms. Its support programs include the C-17 Globemaster III Integrated Sustainment Program and F-15 support programs for the United States Air Force (USAF) and other international customers. Aircraft programs include the Airborne Early Warning and Control (AEW&C) Peace Eagle contract with Turkey and Airborne Warning and Control Systems (AWACS) program. The Company’s training systems and government services comprise a range of training capabilities for domestic and international customers, including the design and development of trainers for multiple aircraft platforms and logistics and asset management solutions.

Boeing Capital Segment

The Boeing Capital segment provides financing services to buy and take delivery of the Company’s products. BCC’s portfolio consists of equipment under operating leases, finance leases, notes and other receivables, assets held for sale or re-lease and investments.

The Company competes with Lockheed Martin Corporation, Northrop Grumman Corporation, Raytheon Company, General Dynamics Corporation, Airbus Group, Embraer, Bombardier and BAE Systems.

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