Boeing in talks with Jet Airways, Air India on 737 MAX jet

HYDERABAD Thu Mar 13, 2014 6:12pm IST

1 of 2. Passengers crowd at the Jet Airways ticketing counters at the domestic airport terminal in Mumbai September 9, 2009.

Credit: Reuters/Punit Paranjpe/Files

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HYDERABAD (Reuters) - Boeing Co (BA.N) is in talks with Jet Airways (JET.NS) about the sale of 737 MAX jets, a Boeing executive said on Thursday, while two other people familiar with the matter said the company had secured the $5 billion deal.

Dinesh Keskar, senior vice president sales for Asia Pacific at Boeing, said he was also in discussion with state-owned Air India AIN.UL over sales of the MAX jets, but that these talks were not as "intensely involved" as they were with Jet.

The two other sources said the Jet deal for 50 planes had essentially been completed and the planes were already listed under Boeing's "business with undisclosed customers", in its order backlog.

The company announced a large chunk of undisclosed orders in its last update for 2013. A formal announcement of the order is on hold as Jet wraps discussions over its fleet with Etihad, which last year bought a 24 percent stake in the Indian carrier, the people said.

Keskar declined further comment on the status of the deal.

Reuters first reported the negotiations with Jet in January.

Keskar said the 737 MAX planes are 14 percent more fuel efficient compared with its 737 planes, making them particularly attractive to Indian carriers hurt by high fuel costs.

Budget airline SpiceJet (SPJT.BO) announced a deal with Boeing on Wednesday to buy 42 Boeing MAX jets in an order worth $4.4 billion.

"Yes, the Indian market right now is going through its difficulties... Today everybody is selling below cost. And that means they are losing money," Keskar said in an interview on the sidelines of the Hyderabad airshow.

"I think India will come out of it. We do see some improvements that are coming up."

Jet Airways and Air India did not immediately respond to requests for comment.

Indian airlines are struggling under the weight of costly fuel and a weak rupee even though India is one of the world's fastest growing aviation markets, with air passenger traffic forecast to triple to more than 450 million by 2020 as incomes rise.

IndiGo is currently the only one among India's five national carriers that is making a profit. Airlines hope that upgrades to their fleet and new investments will revive their fortunes.

Boeing now expects India's commercial aviation fleet to grow more than five times in size over the next 20 years, with demand for 1,600 new airplanes valued at $205 billion.

This is an increase from a Boeing forecast last year of 1,450 new airplanes worth $175 billion. Rival Airbus (AIR.PA) said on Thursday India needs 1,290 aircraft - 73 percent of them additions - worth more than $190 billion in the next 20 years.

Boeing also expects to see demand for its 777X planes, with Singapore Airlines (SIAL.SI), Philippines Airlines, Thai Airways (THAI.BK), Air New Zealand (AIR.NZ) and Virgin Australia (VAH.AX) among those who could be interested, Keskar added.

(additional reporting by Tim Hepher; writing by Tommy Wilkes; Editing by Miral Fahmy and Elaine Hardcastle)

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