India may cancel plane orders as credit tightens

Indian airlines may cancel orders for new Airbus SAS and Boeing Co planes as banks refuse to lend to unprofitable carriers amid the global tightening of credit, the Centre for Asia Pacific Aviation said.
"There is no market for buying aircraft now, because there is no market for financing," said Kapil Kaul, chief executive officer of the consultant's Indian unit in an interview with Bloomberg News in Hyderabad, India, yesterday. "It's a bad situation, which can't be corrected immediately."
At risk are about 300 aircraft due to arrive in India in the next five years that Airbus and Boeing are counting on to help offset slowing demand in Europe and the United States. Jet Airways (India) Ltd, the nation's biggest private carrier, has already held talks about delaying Boeing planes, while Kingfishers Airlines Ltd has scrapped three Airbus orders.
"You show me where is the cash," Naresh Goyal, Jet's chairman, said on Wednesday, when asked about the difficulties of raising funds. The carrier has put off raising US$400 million for two years.
Air India, Jet, Kingfisher Airlines and other carriers from the country have placed orders with Airbus and Boeing totaling more than US$30 billion in the past three years as economic growth spurred optimism about travel demand.
Carriers are now struggling to raise funds because overcapacity, higher fuel prices and slowing demand will likely cause the industry to post US$2 billion of losses this year, CAPA said. Local banks have cut lending to airlines, Civil Aviation Minister Praful Patel said.
Lenders worldwide have also curbed loans across all industries on concerns about getting their money back amid bank failures and an economic slowdown.
17/10/08 Vipin V. Nair/Shanghai Daily, China

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Categories: Indian Aviation- In General Oct 2008