BackBoeing says deliveries for Jet Airways on schedule
Jet Airways's financial performance does not impact Boeing as the former follows a sale and lease back model, says Boeing Commercial Airplanes's Dinesh Keskar
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Mumbai: US-based Boeing Co. will continue to deliver aircraft as planned to Jet Airways (India) Ltd despite the Indian carrier’s financial troubles, a top Boeing executive said. “As far as we are concerned, the airplanes that we are building right now for Jet Airways are already sold to a lessor who will take the delivery. What will happen next only the lessor or Jet can answer," said Dinesh Keskar, senior vice president of sales, Asia-Pacific and India, at Boeing Commercial Airplanes Inc.
In July, the Naresh Goyal-led Jet Airways placed an order for 75 Boeing 737 Max aircraft. This was in addition to an order for 75 of the same aircraft that Jet Airways had placed in 2015.
Jet Airways’s financial performance does not impact Boeing as the former follows a sale and lease back (SLB) model, said Keskar. Under it, a lessor purchases the aircraft and leases it to the airline.
The fuel-efficient, narrow body aircraft will be delivered over 10 years, Boeing had earlier said. Jet inducted the first Boeing 737 Max in its fleet in June this year. The long standing order for ten 787 planes from remains intact and Jet has not cancelled the orders, Kesar said.
“That (787 plane orders) continues to stand on our order book. There is certainly no cancellation from Jet airways," Keskar said. Jet is a valued customer, and Boeing hopes to continue delivering airplanes to it, he said.
Despite the poor financial performance of most airline firms in India, Boeing is bullish that demand for aircraft will see a robust growth given the strong growth in gross domestic product and the growing disposable income of middle class Indians. According to the world’s biggest plane maker, India will need 2,300 airplanes worth $320 billion in the next 20 years, making it one of the fastest growing domestic aviation sectors in the world. Indian aviation registered the 50th straight month of double-digit growth in October.
However, Keskar warned that Indian carriers should strive for break-even for sustainable growth in the long term. “Our forecast is not based on any company’s financial situation... When Kingfisher went away, voids were filled. When voids were created, opportunity was also created," he said.
Almost all airline companies except for Jet Airways have increased their capacity or available seat kilometres (ASK) in December this year, according to data compiled by Boeing. As compared to December 2017, seat capacities of IndiGo and Air India grew by 35% and 11% while Jet Airways saw a drop of 5% in December this year. While SpiceJet and GoAir grew 21% and 14% respectively, AirAsia India and Vistara jumped by 27% and 23% each.
“I hope the fares are rationalised and at least Indian airlines strive for break even," Keskar said.
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