The investment, which adds to the United States manufacturer's expansion into India on top of a record plane order by flag carrier Air India, comes despite a global economic slowdown that has weakened the global air cargo market.

The International Air Transport Association (IATA) said global cargo demand in January fell almost 15 percent year-on-year. Air freight rates are 28 percent below the levels seen at the same time last year, data provider WorldACD said on Thursday.

But in India growing e-commerce demand and manufacturing of smart phones and other electronics for domestic use and export is strengthening the outlook for freighters, Salil Gupte, Boeing's India president told reporters in New Delhi.

Gupte said there was demand to convert more than 1,700 passenger planes globally into freighters over the next 20 years, with about 600 coming from Asia.

"So, it is only fitting that we have the capability to have a line to make those freighters here in India, not just for India, but for the region and for the world," he said.

Boeing with partner GMR Aero Technic, an Indian maintenance, repair and overhaul provider, will over the next 18 months set up the facility in Hyderabad to convert old passenger planes into freighters.

The deal adds to Boeing's US$1 billion supply chain sourcing from India and will help support India's ambitions to become a global cargo hub, chief strategy officer Marc Allen told reporters in New Delhi.

He did not provide any details about when the facility would be set up or the size of the investment.

The planned facility comes amid a push by Boeing to expand in India, including a US$24 million investment to set up a logistics center for aircraft parts.

The slump in travel triggered by the COVID-19 pandemic triggered a record-breaking scramble to convert older passenger jets into freighters. But analysts say that aircraft lessors could now be stuck with excess freighters, or be forced to cancel conversions, as cargo rates fall.

 

Deliveries resumed

In a separate development, the US Federal Aviation Administration (FAA) on Friday approved Boeing to resume deliveries of its widebody 787 Dreamliner next week after the planemaker addressed recent concerns raised by the agency.

The agency halted 787 deliveries on Feb. 23 due to a data analysis error related to the jet’s forward pressure bulkhead, which Boeing found after reviewing certification records.

The FAA said Boeing had addressed those concerns.

"The FAA may resume issuing airworthiness certificates next week," the agency said.

Boeing shares, which were down 1.4 percent before the announcement, closed up 0.91 percent following news of the resumption, which was first reported by Reuters.

Boeing said it had completed the analysis necessary to confirm the aircraft meets requirements and will not require further production or fleet action to meet FAA standards.

"The FAA will determine when 787 ticketing and deliveries resume, and we are working with our customers on delivery timing," Boeing said.

The latest bump in the Dreamliner’s schedule occurred just months after the FAA had approved Boeing to resume 787 deliveries following a year-long pause due to production quality problems.

Deliveries stopped in May 2021 after the FAA discovered gaps around the forward pressure bulkhead, a structure made by Spirit Aerosystems that acts as a barrier between the pressurized interior cabin and the nose of the aircraft.

Boeing agreed to replace that component to gain approval to restart deliveries in August 2022.

The company continued production of the Dreamliner while conducting the analysis necessary to correct the discrepancy.

Boeing delivered three Dreamliners in January. On Feb. 27, Boeing transferred a 787, which was ticketed by the FAA for delivery before the pause began, to United Airlines.

A United Airlines spokesperson said the company expects to receive another 787 by the end of the month.