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No sign of Asia crisis in airplane orders

Boeing is expecting strong aircraft orders from Asia over the next 20 years, with few order deferrals on the horizon, according to the aircraft manufacturer’s Asian chief.

However, rather than place large orders of a 100 or more planes at a time, most carriers in the region have been requesting 40 or fewer or seeking out leasing deals.

“Airlines are getting smarter” at setting their orders, Dinesh Keskar, senior vice-president of Asia Pacific and India sales at Boeing Commercial Airplanes, told a press conference at the sidelines of the Singapore Airshow Monday.

“People have figured out, at least in our case, if you want order big orders, you’ll have to pay deposits on those orders. Why would you put a deposit on an airplane that is delivering in 2030,” Keskar noted.

Now, carriers in the region are using SLB, or sale and leaseback more often, he noted.

“You don’t have a plan for that years in advance. If today you want a (737 MAX) in 2018, I can get you a Max, because there several leasing companies that have bought these planes on spec,” he noted.

Keskar said that customers in the region have not asked Boeing for deferrals.

“In terms of the low-cost-carrier market, our big customer here is Lion Air and we have delivered 165 airplanes for them and they continue to take deliveries on time. They are not asking for deferrals,” he said, noting that the Indonesian low-cost carrier has ordered more than 200 planes.

“Nobody has come to us and asked for any deferrals. When we look at airlines like Virgin Australia, or Jet Airways or Spicejet in India, all of them are doing fine. In fact, some of them want their airplanes early,” Keskar said. “Our backlog is over 5,000 airplanes now so it’s difficult to accelerate anybody’s airplanes.”

There are concerns that could change. Tony Tyler, head of the International Air Transport Association (IATA) said on Sunday that ambitious orders by Southeast Asia’s carriers may come under pressure amid intense competition and uncertain profitability, Reuters reported, noting that profitability for Asian airlines in general tends to be weak compared with other regions. Tyler said he expected some deliveries to be pushed back, the report said.

Overall, Boeing expects the Southeast Asian region will need 3,750 new airplanes valued at $550 billion over the next 20 years, out of global demand for 38,050 aircraft over the same period.

It expects around 75 percent of Southeast Asia’s new deliveries will be more growth, with most demand targeting single-aisle aircraft.

No sign of Asia crisis in airplane orders

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