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Boeing Live Event Coverage

Seattle Times aerospace reporter Dominic Gates covers top industry events to bring you the latest news, highlighting how it impacts Boeing and its competitors.

July 13, 2012 at 5:09 AM

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Boeing's Indian guru: Air India will survive and take all its Dreamliners; aviation on the turn on the subcontinent

Dinesh Keskar has just returned to live in Seattle after a three-year stint as Boeing's president in India. At the Farnborough Air Show, his take on India's aviation sector, currently drowning in red ink and stalled by political paralysis, was surprisingly upbeat.

A pilot strike crippled Air India for 59 days, finally ending just this week. Three Air India 787 Dreamliners (two of them built in Everett) are sitting ready in North Charleston, S.C., awaiting only approval from the Indian government for delivery.

Air India has been bleeding money, losing $3.8 billion in the last three years. Indian carriers this year are projected to have combined losses of $2 billion.

Yet Keskar, now Boeing Commercial Airplanes senior vice president of sales for India and Asia Pacific, has no doubt that Air India will survive and thrive, and that the Indian aviation sector will recover.

"Air India will always be there," said Keskar. "The Dreamliners will be delivered. They are a vital part of the airline's turnaround plan."

His confidence in Air India is based on a $6 billion government cash infusion and the lift its Dreamliners will give it.

His optimism about the whole aviation sector derives from the brutal reduction in airline over-capacity currently happening as well as the recent stabilizing of India's currency and the moderating of oil prices.

Keskar sees not a single cancellation or deferral ahead for any Boeing jets.

It doesn't look so rosy for Airbus, as even its sales chief John Leahy must see when he looks at his order book from Kingfisher Airlines.

Kingfisher, owned by beer magnate V.J. Mallya, once had grand ambitions. It still has a massively expensive pending order list with Airbus, including five A380s, five A350s, 15 A330s and a bunch of A320s.

But in the past year, strapped for cash, Kingfisher has had many of its leased planes repossessed and has shrunk to about a dozen small aircraft. It is behind on payments for fuel, airport fees and pilot salaries.

"V.J. is a nice guy. He ran into some difficult times," said John Leahy in an interview at Farnborough. "There'll be winners and losers in this industry."

And why are those orders still listed as "firm" by Airbus?

Leahy said that the deliveries have been "pushed way out," and that unless an airline ceases to exist he cannot cancel an order if the customer is current on its pre-delivery payments.

With its deliveries now pushed out far into the future, Kingfisher likely has no pre-delivery payments of any significance for years. Those orders have to be as close to dead as makes no difference.

Keskar sees the demise of Kingfisher as boosting the health of the remaining carriers.

With Kingfisher reducing capacity the supply and demand mis-match now has comein balance," Keskar said. "It has allowed airlines to increase fares so they are closer to break even."

Though the airlines are not quite there yet, Keskar added that with oil prices down 20 percent compared to recent highs and the Rupee exchange rate stabilizing, the rise in air fares "will give Indian airlines a fighting chance to start breaking even as early as next month."

"Things are going to get better," he said.

In the Indian market, Kingfisher and low cost carrier Indigo are Airbus customers. Indigo has been doing well.

Boeing sold to Air India, Jet and low cost carrier Spicejet. Keskar said that Boeing backed the right horses.

"Without question," he said. "Jet and Spicejet are keepers." He is confident Jet will stay with Boeing as it considers a big order for single aisle jets.

As for Air India's Dreamliners, he said Boeing has 64 of its pilots trained and ready and the airline desperately needs the airplanes to make money.

The hold-up, he said, is a quirk of Indian politics and not a last-minute price negotiation.

The only approval still needed before delivery is a vote by the Cabinet Committee on Economic Affairs.

That committee hasn't been able to meet because of other political priorities. The key finance minister recently resigned and the other members are busy campaigning for their respective political parties' candidates in the upcoming presidential election.

Air India has large jets and small jets but no mid-sized jets. Keskar said Air India desperately needs all 25 fuel-efficient Dreamliners on order to fill that hole and start making money.

"This is their turning the corner," said Keskar. "Having the Dreamliners."