aviation

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DUBAI -- Oil-rich Persian Gulf states, whose airlines have ordered billions of dollars worth of jetliners, now plan to leverage their financial clout into making parts for those planes.

As Airbus, Boeing Co. and General Electric Co. struggle with soaring oil prices, slowing economies and squeezed delivery dates, multibillion-dollar aircraft orders from airlines in Abu Dhabi and Dubai, in the United Arab Emirates, provide much-needed investment, cheap labor and state-of-the-art facilities.

But the governments in the Gulf region expect something in return, namely commitments to expand the Gulf's airplane-maintenance operations, part of their wider plan to create sources of wealth
 
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NEW DELHI: In a surprise move, a changed accounting practice enabled India's largest private airline Jet Airways to post a Q1 profit of Rs 143 crore in this fiscal- a fourfold jump from Rs 30 crore in the same period last year.

Since jet fuel prices have skyrocketed from this April, all airlines are bleeding heavily with the figure being as high as Rs 10 crore losses daily for big players and Q1 was expected to see huge losses.

However, Jet said it changed its accounting policy during this quarter for charging depreciation on narrow body aircraft used for domestic operations from written down value to straight line, similar to the practice for its bigger planes used on international routes.

"The impact on account of this change in method was about Rs 916 crore for the quarter at the company level," the airline said. The changed accounting practice has clearly helped avert posting a loss. Jet Airways' IPO issue price was fixed at Rs 1,100 in February 2005.

However, after touching a 52-week high of Rs 1,050 last December, the stock has now been trading for less than half that amount.

On Tuesday, scrip closed at Rs 439.95. The airline's low cost subsidiary, JetLite, has reported a loss of Rs 134.80 crore for Q1 this fiscal against Rs 107 crore same period last year. Given the high fuel cost, the Indian aviation industry expects to lose anywhere up to Rs 10,000 crore this fiscal.

While reporting profit, airline admitted a slowdown in demand caused by high fuel prices and inflation.

"Though demand has slowed down in few months, medium to long term story remains intact and is expected to grow between 12% and 15%. Short term slow down is an impact of increase in inflation and consistent increases in air fares."
 
Boeing expects orders to swell from India


If Boeing Company's outlook for the Indian aviation industry is anything to go by, the current industry downturn is a short-term phenomenon.



In its market outlook for India for 2008, the aircraft maker Boeing has forecast an increase in demand over a 20-year period, from 911 aircraft projected last year to 1,001 aircraft now. The forecast includes both passenger and freighter aircraft, and takes the order size from $86 billion to $105 billion.

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Not just between now and 2027, Boeing appears to be bullish even in the near term. Senior VP (sales) Dinesh Keskar said his company has not received a single request for order cancellation despite the Indian aviation industry's dismal performance in the first six months of this year.

"We think the market has about 10% overcapacity still left and once this is addressed, the situation would be back to normal. I think this should take between six months and one year."

The 2008 forecast for India includes 59(55) regional, 728(672) single aisle, 203(173) twin aisle and 11(11) 747 and larger airplanes. The biggest increase from Boeing's previous forecast was in the single aisle category.

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Keskar said commercial airplanes in the 100-400-seater categories will account for the vast majority of the growth in air travel over the next two decades "and airlines will accommodate that growth by adding frequencies and point-to-point non-stop flights."

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He said the recent Boeing orders in India stood at 164 aircraft worth $25 billion where Air India ordered 68, Jet 63, SpiceJet 30 and Indian Air Force 3 aircraft. This year, the Indian industry has 300 aircraft but another 345 are on order
 
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