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Rupee slump not to hit India jet orders: Boeing

Boeing Chief Executive Officer James McNerney said he expects the Indian rupee’s slump to be temporary and won’t affect the planemaker’s business in Asia.

Indian customers are buying commercial aircraft, border patrol planes and helicopters as well as C-17 transports, McNerney said on Friday in an interview in Calgary, where he was attending the Spruce Meadows Changing Fortunes Round Table conference.

“This is a robust market for us,” McNerney said. “They’re continuing to be a strong customer.”

The rupee’s 18 per cent drop this year versus the dollar spurred Reserve Bank of India Governor Raghuram Rajan to provide concessional swaps for banks’ foreign-currency deposits to bolster reserves. Standard & Poor’s this week reiterated it may downgrade India’s rating to junk as Prime Minister Manmohan Singh lagged behind counterparts in Malaysia and Indonesia, who have both raised subsidised fuel prices to curb budget deficits.

“The rupee has gone through this kind of difficulty before,” said McNerney, 64. Singh “knows how to run an economy,” and India’s fundamentals are “pretty good.”

Carriers in India will need 1,450 new planes valued at $175 billion over the next 20 years, Chicago-based Boeing forecast in February. The International Air Transport Association has said India may become the world’s fastest-growing aviation market after Kazakhstan by 2016.

Air India, which has taken delivery of seven Boeing 787s, is in the process of receiving the remaining 20 on-order Dreamliners. The carrier will get three more Boeing 777s ordered in 2005.

Emerging markets such as India and China, after helping spur Boeing and rival Airbus SAS to a record $573.4 billion in large jetliner deliveries over the past decade, now pose a drag on future growth, Richard Aboulafia, an aviation consultant with Teal Group in Fairfax, Virginia, wrote in a note to clients last month.

“China, the big driver, is hoping for a soft landing,” Aboulafia said. “India, the second growth leader, is coping with slumping numbers and a collapsing rupee that’s at an all- time low, which complicates jet financing. The good old days of 10 per cent to 20 per cent traffic growth are over.”