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Indian airline to buy more Boeing planes as competitor enters market

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By Karthikeyan Sundaram
Bloomberg News
Published:
NEW DELHI -- Jet Airways (India) Ltd. plans to order more aircraft as it prepares to fend off competition from Asia's biggest budget carrier, which seeks to start operations in the country this year.
Jet Airways is considering an order for Boeing 737 planes, K.G. Vishwanath, the Mumbai-based carrier's vice president of commercial strategy, told analysts in a conference call Monday. He didn't disclose the number of aircraft or a time frame.
The airline, which has agreed to sell a stake to Etihad Airways PJSC, will boost domestic seat capacity by as much as 8 percent a year as it takes delivery of 46 aircraft, ordered with Boeing earlier, over three years, Vishwanath said. The number of airline passengers in the country may triple to 180 million by 2021, the government has forecast, as more people fly instead of taking trains.
"They definitely need more aircraft," said Harsh Vardhan, chairman of New Delhi-based Starair Consulting. "Jet has to fight for market share. With Etihad on board, they've the resource to do that."
Jet Airways rose 0.9 percent to 552.30 rupees Tuesday at close of trading in Mumbai. The stock has lost 1.3 percent since the start of the year, compared with a 3.8 percent gain for the benchmark S&P BSE Sensex.
Carriers in India will need 1,450 new planes worth $175 billion over the next 20 years, Boeing forecast in February. The International Air Transport Association has said India may be the world's fastest-growing aviation market after Kazakhstan by 2016.
Over the past seven years, airline passenger traffic in India more than doubled to about 60 million annually. In comparison, Indian railways carry 23 million travelers every day on Asia's oldest network.
AirAsia has partnered with Tata Group for its India venture, which may start operations later this year. Tony Fernandes, AirAsia group chief executive, has expanded the Malaysian carrier into the region's biggest discount operator by setting up ventures in the Philippines, Japan, Thailand and Indonesia.
In December, AirAsia ordered 100 Airbus SAS A320s valued at $9.4 billion, in addition to the 200 it had agreed in 2011 to purchase. IndiGo, the discount carrier that last year overtook Jet Airways to become India's biggest in terms of domestic market share, ordered 180 A320s in January 2011.
Jet Airways, the nation's biggest listed carrier, may buy 50 737 MAX and about 10 777-300ER from Boeing and order 50 Airbus A320neos at the Paris Air Show, the CAPA Centre for Aviation, a Sydney-based consulting company, said this month. Vishwanath Monday said the carrier has no plans to order the A320neos. The Paris Air Show begins June 17.
Jet Airways, which started operations in 1993, has a fleet of 100 aircraft, according to the company's website. IndiGo, which began flying in 2006, has 65 aircraft.
Chairman Naresh Goyal last month agreed to sell a 24 percent stake to Abu Dhabi's Etihad Airways for 20.6 billion rupees ($370 million) after the Indian government eased aviation investment rules. Jet Airways plans to repay $350 million of debt, including aircraft loans, to pare costs, Vishwanath said yesterday.
The carrier last week posted a wider-than-estimated fourth- quarter loss of 4.96 billion rupees as aircraft lease costs increased and the airline had a one-time expense. Jet Airways hasn't posted an annual profit in the six years through March. As a standalone business, it reported a profit of 96.9 million rupees in the 12 months ended March 2011.
Jet Airways will focus on increasing services to Abu Dhabi by adding more direct flights to the emirate from smaller Indian cities, Vishwanath said. The carrier will also look at expanding services to Europe with new direct flights.
Starting 2015, Jet Airways will take deliveries of 10 on-order Boeing 787s to expand international operations, according to Vishwanath. The airline will also look at leasing out six Airbus A330-200 jets to Etihad, he said.
Story tags » Boeing

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