AI seeks $740 mn loan to buy 6 Boeing planes

While the government is working on final contours for a strategic divestment of its stake in loss-making Air India, the airline is ready with plans to fly to more overseas destinations.

Illustration: Uttam Ghosh/Rediff.com

Air India is looking for bridge loans worth up to $740 million to finance purchase of six Boeing 787-8 planes, according to a tender document.

While the government is working on final contours for a strategic divestment of its stake in loss-making Air India, the airline is ready with plans to fly to more overseas destinations.

The airline has sought offers from banks and financial institutions to arrange bridge financing of up to $740 million for the six aircraft.

The amount translates into around $123.3 million per plane.

At the current exchange rate, $740 million is around Rs 4,720 crore.

"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 said.

Air India has an agreement with Boeing Company for purchase of 27 B787-8 planes. Out of them, the airline has completed the sale and lease back for 21 aircraft.

For three B787-8 planes -- each of which was delivered in November 2016, January and July -- Air India had arranged bridge financing without Indian government's guarantee.

Among the remaining three aircraft, two are scheduled to be delivered this month and one in October.

According to the document, the government has indicated that it would issue guarantee for the six B787-8 aircraft, which includes three that have already been delivered.

"Therefore, Air India would like to refinance the bridge loan for 22nd to 24th B787-8 aircraft and needs interim bridge financing for the remaining three B787-8 aircraft (25th to 27th) for 15 months at the time of delivery," the document said.

Air India has a fleet of 110 planes, including 33 Boeing aircraft.

Air India, which has the largest international market share among domestic carriers, will soon be launching flights to Stockholm and Copenhagen.

Last month, the airline started direct service between New Delhi and Washington, its fifth destination in the US.

As part of efforts to revive Air India, the Cabinet has given its in-principle approval to stake sale in the airline -- which is surviving on taxpayers' money.