Asian airlines more cautious with orders – Boeing

SINGAPORE, Singapore – Asian airlines which were famed in the past for multi-billion-dollar orders have become more cautious in the face of thinner profits and a global economic downturn, a Boeing executive said Monday, February 15.

“Nobody has come to us and asked for any deferral,” said Dinesh Keskar, senior vice president for sales at Boeing Commercial Airplanes covering the Asia-Pacific and India.

But Keskar, speaking on the eve of the Singapore Airshow, said the time for big-ticket orders may be over, replaced by smaller buys with shorter replacement cycles.

“From the Boeing point of view, we are in a good spot,” said Keskar, 

“In terms of the low-cost carrier market, our big customer here (in Southeast Asia) is Lion Air. We have delivered 165 airplanes for them and they continue to take deliveries on time,” he told reporters.

“When we look at airlines like Virgin Australia, Jet Airways or Spice Jet in India all of them are doing fine. In fact some of them want their airplanes early, and our backlog is over 5,000 airplanes now so it’s difficult to accelerate anybody’s airplanes.”

However, airlines had become more cautious.

“You haven’t seen any substantial orders from this part of the world (recently) and I think there was a time when a hundred-plane order was considered the fashion. It isn’t the case right now,” Keskar said.

In August last year, Indian airline IndiGo confirmed an order for 250 A320neo planes from Europe’s Airbus in a deal worth $26.5 billion at catalogue prices at that time.

Tony Tyler, director-general of the International Air Transport Association, said Sunday some airlines in the region may try to push back their orders due to softer profits.

He said that while airlines worldwide are expected to deliver $36 billion in profits this year, up 10% from 2015, the majority of this would be coming from North America.

Speaking at an aviation conference on Monday, Tyler said Asia-Pacific carriers are expected to generate $6.6 billion in profit this year, equating to just over $5.0 per passenger, compared to $21 per passenger in North America.

Airline savings from low fuel costs are being eroded by hedging losses and a strong dollar, Tyler said, noting that the greenback climbed 20% over the past 18 months.

With the Asia-Pacific accounting for 40% of global air cargo, regional carriers have been hit badly by the global economic slowdown, worsening the impact of competition from Gulf carriers, the IATA chief added.

Over the long term, however, the region’s prospects are buoyant, according to Boeing’s Keskar.

Airlines worldwide will need 38,050 new planes valued at $5.6 trillion in the next 20 years, with Asia accounting for 38% of the deliveries, he said. – Martin Abbugao, AFP / Rappler.com