Air India looks to expand fleet even as centre plans disinvestment

The government may be looking at disinvesting Air India but the national carrier is going ahead with its fleet expansion plans and looking for interim financing worth USD 740 million (around Rs 4,720 crore) for buying six Dreamliners.

It has invited offers from banks and financial institutions to arrange bridge financing for the amount for 15 months for buying these Boeing 787-8 planes. This could mean that one plane could cost USD 123.3 million.

Earlier in March, Air India had sought USD 470 million or around Rs 3,100 crore from banks and financial institutions to buy four Dreamliner planes from the Boeing.

Of the six, three aircraft have been delivered while the rest would be delivered by October. No government guarantee was given for the three aircraft which were delivered already.

The government has now indicated that they would issue its guarantee for all these six aircraft and Air India is looking at refinancing the bridge loan for the three delivered planes and interim bridge financing for the rest for a period of 15 months.

"In addition to the Government of India guarantee, Air India will offer the aircraft as a security. The facility should be a direct loan without the requirement for formation of a special purpose vehicle structure which requires title transfer," the tender document issued last Friday said.

"Air India would prefer to have a bullet repayment for this facility or a suitable moratorium period for payment of the principal amount under this facility. The bidder with the lower all in costs would be selected," it said.

As part of its fleet expansion plan, Air India had in 2006 placed orders with Boeing for 68 aircraft -- 27 Dreamliners, 15 B777-300ERs, eight B777-200LRs and 18 B-737-800s.