Neha Jain: http://indianairlinesnews.blogspot.com/4

1. GE Aviation, Air India sign 20-year MRO pact

GE Aviation has signed a 20-year engine maintenance agreement with Air India [ Images ]. The agreement covers the maintenance, repair and overhaul (MRO) of GE90 aircraft engines.

"Air India will expand its MRO capabilities at its Mumbai [ Images ] facility to include GE90 engine overhaul. The current schedule calls for the Mumbai facility to be certified for basic GE90 MRO by 2012. Eventually, Air India plans to build a new MRO facility in Nagpur that will include GE90 testing capabilities," said a release from GE Aviation.

"Air India has more than 40 years of providing high-quality MRO services in India. Adding GE90 engine overhaul service is the perfect expansion of Air India's MRO capabilities," said Nalin Jain, country director for GE Aviation.

While Air India develops its GE90 MRO capabilities, GE will provide the carrier with overhaul services to support the carrier's GE90 engine fleet.

Air India had ordered 23 GE90-powered Boeing 777 aircraft in 2005. It operates 20 of these and the remaining three will be delivered in the next few years.

The carrier has established partial capabilities to service GE90 engines in Mumbai. "Three engine overhauls were recently completed, saving us shipping costs and reducing our turnaround time. This will help us, as we prepare to take on third-party work in the facility," said K M Unni, SBU Head of MRO SBU and board member.

2. GE Aviation, Air India sign MRO pact news
Mumbai: GE Aviation, a subsidiary of General Electric Co, has signed an engine maintenance agreement with flag carrier Air India, the US company said Thursday. The 20-year agreement will cover maintenance, repair and overhaul of GE90 aircraft engines, the company said.

No announcement was made as to the financial terms of the contract.

GE Aviation will provide maintenance support at the national carrier's current facility in the city of Mumbai as well as at the upcoming facility at Nagpur in central India, it said.

Air India ordered 23 GE90-powered Boeing 777 aircraft in 2005 and currently operates 20 of these planes.

3. TEXT-Fitch assigns AAA(SO)(ind) rating to Air India's NCDs

(The following statement was released by the ratings agency)

Feb 3 - Fitch Ratings has today assigned Air India Ltd's [AIN.UL] (Air India - formerly known as National Aviation Company of India Ltd) INR7,000m non-convertible debenture (NCD) programme a final 'AAA(ind)(SO)' rating.

The assignment of the final rating to the NCD programme is based upon the execution of the debenture trust deed and deed of guarantee and indemnity, conforming to information already received.

The rating reflects the absolute, unconditional and irrevocable guarantee extended by the Government of India (GOI, foreign currency Issuer Default Rating: 'BBB-'/Stable), which covers timely repayment of both principal and interest. The rating is further supported by the guarantee structure, which ensures due and timely payment of debt service. The guarantee is legal, valid and binding even in the event Air India goes insolvent and files for protection.

For further details, please refer to the rating action commentary, entitled, "Fitch Assigns Expected Ratings of 'AAA(ind)(SO)' to India's National Aviation Company's NCDs", dated 23 March 2010 and available at www.fitchratings.com.

4. Jet Airways' growth momentum likely to sustain; fuel cost a worry

Jet Airways (India) Ltd.
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The third-quarter financial performance of Jet Airways India shows the company's operations are improving. The momentum is likely to sustain in the next three quarters as well, given its cost rationalisation in the past and the upward trend in passenger traffic .

In the December 2010 quarter, the company's net profit rose by 11.7% to 118 crore from the year ago. The company benefited from the 14% growth in passengers and also the conversion of its low-cost carrier (LCC) to full-service carrier and rupee-denominated debt to dollar-denomination. By December 2010, the Mumbai-headquartered company had converted debt of about 2,000 crore of its total debt of 13000 crore into the dollar-denomination, helping it save 5% on interest costs. Also, the flexibility to convert LCC traffic into full services resulted in enhanced yields.

The company's domestic and international operations, on a quarter-to-quarter consideration, have generated positive growth in yields. In the December 2010 quarter, yield for the company's domestic operations increased by 6.3% to 5.69 on a year-on-year consideration. Sequentially, considering the company's September 2010 quarter, the yield for domestic operations increased by 16%. It also pushed the company's earnings before interest, depreciation, tax, amortisation and rental (EBIDTAR) - a variable for operational performance - in the December 2010 quarter to 851 crore, a YoY growth of 17.4%.

In the March 2011 quarter, due to seasonality of business, the company's yield, calculated as revenue per kilometre per paid passenger, may fall 3% from 5.7. This fall, however, would be cushioned by three factors. The March 2011 quarter will see higher traffic due to the cricket world cup, ensuring continued momentum in traffic in the industry, which is growing at a healthy rate of 19%. Jet Airways, with the biggest market share of about 26%, will benefit from this.

The company will also benefit from shifting a significant part of the capacity of Jet Konnect - a no-frills carrier - to its full services carrier Jet Airways. It has converted about 54% of its Jet Konnect traffic to Jet Airways. Further, its new routes, including Johannesburg and Milan, which it launched last year, are expected to breakeven in the near term.

The only concern is the negative impact of crude oil prices. For Jet, the per litre expense on aviation turbine fuel has increased by nearly 14% since December 2010. Its near-term performance will also hinge on the extent to which the company can pass on the increase in fuel cost to travellers.