New Delhi, Aug. 10: Air India is planning to take a $500-million bridge loan to buy 27 Boeing 787 aircraft, which are likely to start arriving from this month.
According to airline sources, the carrier plans to repay the loan by selling and leasing back the aircraft. The national carrier has floated a tender for the loan, which states that banks can submit bids by August 24.
Air India has borrowed $195 million from Standard Chartered Plc. Overseas borrowings are part of a financial reorganisation plan the government approved for the Mumbai-based airline after it piled up about $4.5 billion in losses in the four years ended March 31.
Government support is helping Air India raise funds to expand operations. CAPA —Centre for Aviation, an industry consultant — predicts India’s air traffic to grow 10 per cent this year.
As part of its financial reconstruction, Air India is modernising its fleet to cut fuel costs, attract passengers and open routes that will be profitable with the new planes.
Air India will start preparing this week to take its first Dreamliner. The national carrier will be the third carrier to receive the plane, after All Nippon Airways and Japan Airlines. It is the first aircraft to be built with a large plastic fuselage, reducing fuel consumption.
According to officials, Air India is also selling a record amount in rupee bonds to take advantage of a decline in local borrowing costs. It is offering Rs 7,400 crore of 19-year notes at a maximum rate of 9.5 per cent. It had issued 20-year securities at 10.05 per cent in September 2011.
Air India is preparing to borrow overseas after falling costs and credit risk prompted the State Bank of India and the Export-Import Bank of India to sell last month the first dollar debt by local companies since February. The two lenders raised a combined $1.75 billion issuing five-year notes.
On August 3, the cabinet committee on economic affairs permitted Air India to start taking delivery of the Dreamliners after signing a compensation agreement with Boeing for the delay in delivery.
Meanwhile, Air India is also planning to open all its international routes that were closed down following losses on account of a 60-day strike by pilots.
According to company officials, operations will start for New York, Chicago and Paris, while flights to Hong Kong and Shanghai will resume. The airline will also add more services to the busy Southeast Asian regions by mid-August.
Air India and Boeing confirmed that preparations will start this week to take delivery of the 787. They added that delivery would proceed according to the schedule set by the national carrier.
The aircraft would be brought to India one at a time each in a gap of seven to 10 days to allow the Indian delivery crew to return to South Carolina after each delivery.
The three aircraft are ready for delivery at Boeing’s North Charleston plant in South Carolina.