Nevrekar
7th Feb 2007, 23:45
Boeing Expects to Keep India Orders Amid Airlines' Losses
By Anand Krishnamoorthy
Feb. 7 (Bloomberg) -- Boeing Co., the world's second-biggest aircraft maker, said it's confident of keeping its $15 billion of orders from airlines in India, where most carriers are posting losses on low fares and increasing competition.
The planemaker's clients, including Jet Airways (India) Ltd. and Air India Ltd., have the financial strength or government backing to keep their orders, said Dinesh Keskar, Boeing's vice president in charge of India sales, in an interview in Mumbai yesterday. Boeing is retaining its India forecast, he said.
Airbus SAS's and Boeing's orders for more than 450 planes from India's carriers may be at risk of delays or cancellations because losses are mounting among the airlines, analysts have said. Indian airlines are estimated to lose a combined $500 million this year and last, because increasing competition is forcing them to sell tickets at below-cost prices.
``We're confident of all the deliveries,'' Keskar said. ``We've chosen our partners in India carefully, and we know the orders will be fulfilled.''
India's carriers have ordered more than 450 planes, including options, from Airbus and Boeing to tap a 25 percent annual increase in passenger traffic.
Airline Losses
The number of planes flying in India has doubled to almost 300 in the past two years, forcing fares as low as 1 rupee (2 cents). Almost all carriers in India are losing money, according to Praveen Vetrivel, a London-based analyst at IBA Group Ltd., an industry consultant.
``Unless the airlines find a way to utilize capacity, there is going to be delay in taking delivery, and then cancellations,'' Vetrivel said. ``There is too much capacity being added too soon in India, and it's all profit-less growth.''
Air India, the state-owned overseas carrier, Jet Airways, the country's biggest airline, and SpiceJet Ltd., India's second- biggest low-fare airline, ordered a combined 98 aircraft from Chicago-based Boeing in 2005.
Kingfisher Airlines Ltd., owned by the nation's biggest brewer, Deccan Aviation Ltd., India's biggest low-fare airline, and GoAirlines India Pvt. have ordered more than 200 planes from Toulouse, France-based Airbus.
Air India's $11 billion order of 68 planes, which has the backing of the federal government, is the biggest ever in India by value. It was also the largest order by value for Boeing worldwide in 2005.
``Air India has sovereign guarantee, Jet Airways has a healthy balance sheet over a decade, and SpiceJet's load factor is in the high 90s,'' Keskar said.
Jet Airways earned a net income of 400 million rupees ($9.1 million) in the three months ended Dec. 31, its first profit in three quarters. SpiceJet expects to post a profit this year, and Air India hasn't disclosed financial results since it is fully owned by the government.
Boeing expects India's carriers to order 856 commercial planes in the next 20 years, Keskar said, reiterating last year's forecast. Rival Airbus said in December that India's carriers will buy 1,100 planes worth $105 billion in the next 25 years.
To contact the reporter on this story: Anand Krishnamoorthy in New Delhi at [email protected]
By Anand Krishnamoorthy
Feb. 7 (Bloomberg) -- Boeing Co., the world's second-biggest aircraft maker, said it's confident of keeping its $15 billion of orders from airlines in India, where most carriers are posting losses on low fares and increasing competition.
The planemaker's clients, including Jet Airways (India) Ltd. and Air India Ltd., have the financial strength or government backing to keep their orders, said Dinesh Keskar, Boeing's vice president in charge of India sales, in an interview in Mumbai yesterday. Boeing is retaining its India forecast, he said.
Airbus SAS's and Boeing's orders for more than 450 planes from India's carriers may be at risk of delays or cancellations because losses are mounting among the airlines, analysts have said. Indian airlines are estimated to lose a combined $500 million this year and last, because increasing competition is forcing them to sell tickets at below-cost prices.
``We're confident of all the deliveries,'' Keskar said. ``We've chosen our partners in India carefully, and we know the orders will be fulfilled.''
India's carriers have ordered more than 450 planes, including options, from Airbus and Boeing to tap a 25 percent annual increase in passenger traffic.
Airline Losses
The number of planes flying in India has doubled to almost 300 in the past two years, forcing fares as low as 1 rupee (2 cents). Almost all carriers in India are losing money, according to Praveen Vetrivel, a London-based analyst at IBA Group Ltd., an industry consultant.
``Unless the airlines find a way to utilize capacity, there is going to be delay in taking delivery, and then cancellations,'' Vetrivel said. ``There is too much capacity being added too soon in India, and it's all profit-less growth.''
Air India, the state-owned overseas carrier, Jet Airways, the country's biggest airline, and SpiceJet Ltd., India's second- biggest low-fare airline, ordered a combined 98 aircraft from Chicago-based Boeing in 2005.
Kingfisher Airlines Ltd., owned by the nation's biggest brewer, Deccan Aviation Ltd., India's biggest low-fare airline, and GoAirlines India Pvt. have ordered more than 200 planes from Toulouse, France-based Airbus.
Air India's $11 billion order of 68 planes, which has the backing of the federal government, is the biggest ever in India by value. It was also the largest order by value for Boeing worldwide in 2005.
``Air India has sovereign guarantee, Jet Airways has a healthy balance sheet over a decade, and SpiceJet's load factor is in the high 90s,'' Keskar said.
Jet Airways earned a net income of 400 million rupees ($9.1 million) in the three months ended Dec. 31, its first profit in three quarters. SpiceJet expects to post a profit this year, and Air India hasn't disclosed financial results since it is fully owned by the government.
Boeing expects India's carriers to order 856 commercial planes in the next 20 years, Keskar said, reiterating last year's forecast. Rival Airbus said in December that India's carriers will buy 1,100 planes worth $105 billion in the next 25 years.
To contact the reporter on this story: Anand Krishnamoorthy in New Delhi at [email protected]