SpiceJet Boosts Fleet with First Two Overhauled Engines, Ungrounds Boeing 737 NG

New Delhi, July 3, 2025 — In a significant operational development, SpiceJet Ltd., one of India’s low-cost carriers, announced on Wednesday that it has successfully inducted two overhauled engines into its fleet. The milestone allows the airline to unground one of its Boeing 737 Next Generation (NG) aircraft, marking a key step in the airline’s phased revival strategy.

Fleet Revival Gains Traction

The airline, which has been grappling with financial stress and a grounded fleet due to engine shortages and regulatory constraints, termed the return of the Boeing 737 NG as “a major boost” to its capacity and operational strength.

“These engines are the first of several we expect to be overhauled and returned to service over the next few months,” SpiceJet Chairman and Managing Director Ajay Singh said in a statement. “This marks a significant step towards normalizing our operations and scaling up our flight schedule to pre-pandemic levels.”

According to industry sources, SpiceJet has over a dozen aircraft grounded due to various technical and financial challenges. The induction of the overhauled engines signals progress in its ongoing restructuring, which is expected to involve both internal asset monetization and external fundraising.

Market Context: Pressure and Opportunity

India’s aviation market is witnessing a strong post-pandemic recovery, led by surging domestic passenger traffic and a revival in international travel. However, capacity constraints among low-cost carriers (LCCs) like SpiceJet, Go First, and Akasa Air — due to aircraft groundings and supply chain issues — have resulted in elevated fares and demand-supply imbalances.

“The return of even a single aircraft can shift dynamics in key metro routes, especially for carriers like SpiceJet that have been operating with a truncated fleet,” said Arvind Kapur, aviation analyst at Centrum Broking. “Operational restoration improves both revenue-generating potential and investor confidence.”

DGCA data shows that SpiceJet’s market share dipped to under 5% in recent months, from highs of around 15% pre-2020. Rebuilding operational capacity could help the airline regain some lost ground, especially during the upcoming festive and winter travel season.

Maintenance Strategy and Future Additions

The overhauled engines have been leased through an international engine lessor under a short-term contract, with options to extend based on operational needs. SpiceJet is also working with MRO (Maintenance, Repair, and Overhaul) partners in Asia and the Middle East to expedite the restoration of additional engines in the pipeline.

The restored Boeing 737 NG aircraft is expected to be deployed on high-demand domestic sectors in the coming week, with international routes under review for subsequent additions.

A senior executive close to the matter noted that three more engines are undergoing overhauls and could be back in service by August, potentially ungrounding at least two more planes.

Analyst Perspectives: Light at the End of the Runway

While the development is encouraging, aviation experts caution that SpiceJet’s turnaround still depends on consistent financial inflows, prudent capacity deployment, and operational reliability.

"Restoring a few aircraft is positive, but it must be supported by sustainable funding and a strategic plan," said Radhika Mehra, equity research head at JM Financial. "The airline has made progress, but market sentiment remains fragile. Creditors and investors are watching closely."

The company is reportedly in advanced talks to raise fresh capital through a mix of equity infusion and asset monetization. A previously announced rights issue is also expected to conclude later this quarter, which could further aid liquidity.

Investor Outlook: Signs of Stability

SpiceJet’s stock has seen a mild rebound in the last week, closing at ₹41.20 on Wednesday, up nearly 6% over five trading sessions. The engine overhaul news triggered renewed interest among retail investors, though institutional activity remains limited.

Market watchers say the airline’s ability to restore its fleet, generate consistent revenue, and manage costs will be key drivers for its share performance.

“The ungrounding of aircraft improves operational leverage,” said Rajiv Jain of Reliance Securities. “But SpiceJet must demonstrate scale and financial discipline to convert this into shareholder value.”

Brokerages remain largely cautious, with a “hold” or “underweight” rating, citing high debt, unresolved litigation, and sectoral competition as ongoing risks.

A Strategic Lift-Off

As SpiceJet navigates a critical phase of revival, the restoration of a Boeing 737 NG aircraft through overhauled engines offers not only a technical boost but also a psychological uplift for stakeholders. With several more aircraft awaiting similar interventions, the coming months will be crucial in determining whether the airline can reclaim its lost altitude in India's competitive aviation space.