Boeing Rides Strong Indian Demand to a $5B Jet Airways Deal

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Following a report of a $4.4 billion deal with Indian budget carrier SpiceJet, Boeing (NYSE:BA) is rumored to be in discussions for a $5 billion contract with India’s Jet Airways for a new order of Boeing’s 737 MAX aircraft. Dinesh Keskar, the senior vice president of sales for Asia Pacific at Boeing, told Reuters that he was also in discussions with state-owned Air India over sales of the MAX jets, but that these talks were not as “intensely involved” as they were with Jet.

The deal includes fifty of the new planes; sources told Reuters that the deal had “essentially been completed” and that the planes were already listed under Boeing’s “business with undisclosed customers” in its order backlog.

Keskar said the fuel-efficient nature of the 737 MAX planes — which are 14 percent more fuel efficient compared with its 737 planes — is making them especially attractive to Indian carriers, which have been hurt by high fuel costs. ”Yes, the Indian market right now is going through its difficulties. … Today everybody is selling below cost. And that means they are losing money,” Keskar said in an interview with Reuters at the Hyderabad Airshow. “I think India will come out of it. We do see some improvements that are coming up.”

Not helping their case is a weak rupee, which, combined with elevated fuel prices, is putting a hefty dent in Indian carriers’ margins. IndiGo is currently the only one among India’s five national carriers that is making a profit, according to Reuters, and the airlines are hoping investments and fleet upgrades will help boost profitability.

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Over the next five years, Boeing is projecting that “India’s commercial aviation fleet will grow more than five times in size over the next 20 years, with demand for 1,600 new airplanes valued at $205 billion,” the news service reports. Boeing’s forecast last year called for 1,450 planes, worth around $175 billion.

Boeing’s primary rival, Airbus, also said Thursday that India needs 1,290 aircraft, 73 percent of them being additions, worth more than $190 billion over the next twenty years. The point to take home is India is a fertile market for new aircraft contracts.

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