Aviation

BoI lends Air India $200 mn to buy planes

Mumbai

For the first time, Indian banks have started evincing interest in financing aircraft purchase, with state-run Bank of India (BoI) extending a loan of $200 million to Air India to finance the acquisition of three Dreamliners , official sources said on Sunday.

The national carrier will use the amount to acquire these Boeing 787s before offering them to leasing companies for sale and leaseback arrangement, under which one sells an asset and leases it back, thereby continuing to use the asset but no longer owning it.

BoI has given a stand-alone loan of $200 million for three of these airplanes, the sources said, adding that BoI and the State Bank of India have earlier taken a share of financing aircraft purchase. The airline plans to raise $500 million in this financial year through bridge loans to finance five Dreamliners. Air India has also received a credit of $288 million from Standard and Chartered Bank to pay off the bills for the fuel its planes pick abroad, besides purchase of simulators and spare parts, they said.

Almost 70 per cent of an airline’s costs are dollar- related since most of the acquisition is carried out from foreign suppliers. Air India, which has issued a tender for 12 Airbus A- 320s, would soon conclude the lease of five of these aircraft, which would be in an all-economy configuration, the sources said. The national carrier’s capacity is expected to grow by 9.2 per cent with the addition of six more Dreamliners to the fleet, they said. As of February this year, the airline has 13 Dreamliners in its fleet out of a total order of 27.

Read the full report here, Business Today

LEAVE A REPLY

Please enter your comment!
Please enter your name here