Monday, February 8, 2016

Spice, Jets, and Everything Nice

SpiceJet has a quandary. It needs builder's delivery slots on its time and it can't wait in line. The suitors banging at its door have a problem. One has already promised 4,500 NEO's the other is up to its eyebrows with 3,000 Max. The manufacturer can promise almost anything, but on SpiceJet's time, it's a false patronization from the suitor's.



Late to the party is how late SpiceJet must consider in its own demise. An important decision, indeed. What manufacturer best suits SpiceJet's latest interest in a build date is the problem? Will a SpiceJet dither will cause its Spice to wither while in waiting. How big a deal is the tease for either manufacturer, its $11 Billion big, and coming with bragging rights? It is not a matter who has the best Single Aisle, more than it's a matter for SpiceJet’s operational needs. It needs Single Aisle to arrive on-time. They are waiting for build slots for its own time before choosing.

An interesting conundrum for the framers. Is SpiceJet using the leverage of time of delivery for the deal making instead of a low ball price factor? The answer is not so simple as usual. Time and price are ranked one and two in the sequence of priorities. SpiceJet’s identified need for its growth is running up against a due date of delivery. It maybe, has identified a lull in ordering for both makers which will only last at most for sixty days. Every two months something happens with one or the other framers for adding more orders. The longer SpiceJet waits, the further opportunity pushes back for its fleet renovation and expansion. If SpiceJet had the financial chops pushing forward its expansion, SpiceJet might worry the framers into going lowball and promise a delivery moon, when it can't deliver an exact time for all its prior 7,500 collective orders.

It seems like SpiceJet is causing its own dilemma in this matter and may lose a window of opportunity before deciding on committing to an $11 Billion order for Single Aisle. Having a point number three, not mentioned earlier is the customer, after-all customers are kind of pointless in India. 

I almost forgot: With whom will win the order with SpiceJet's need? 

That answer comes from who has the most slots available for SpiceJet. A guess naturally comes from the 3,000 backlog of Boeing's Max.

Reference Article: Airbus or Boeing: $11 Billion Dollar Deal Rests On Timeliness