IN A first, public sector lender Bank of India (BoI) is disbursing loan amounting to $200 million to Air India to finance the acquisition of three Dreamliners. This is for the first time that Indian banks have started...
showing keen interest in financing aircraft purchase. Aviation is a huge sector in India and the PSU banks have thus identified a key area as their customer.
According to media reports, Air India would use the amount to acquire these Boeing 787s before offering the aircraft to leasing companies for sale and leaseback arrangement. BoI has already given a stand-alone loan of $200 million for three of these aircraft. Earlier, BoI and largest public sector lender State Bank of India (SBI) have taken a share of financing aircraft purchase. The national carrier plans to raise $500 million in this financial year through bridge loans to finance five Dreamliners.
Air India, which had issued a tender for 12 Airbus A-320s, would soon conclude the lease of five of these aircraft. Air India’s capacity is expected to grow by 9.2 percent with the addition of six more Dreamliners to the fleet, says media reports.
Till February this year, Air India has 13 Dreamliners in its fleet out of a total order of 27.
With an enhanced fleet strength, Air India is targeting a domestic load factor of 76.6 percent in 2014-15 and 74 percent on the international front. In the current financial year, Air India has projected a passenger-revenue of Rs 16,400 crore, a growth of 14.5 percent over Rs 14,300 crore in 2013-14. At a time when the national carrier is planning to cut the salary of its pilots by at least 15 percent the loan for buying additional aircraft may not go down well with the employees of the beleaguered carrier that has been witnessing heavy losses in recent years.
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