AI scouts for $535 mn loan to buy three Boeing planes

NEW DELHI: Air India is looking to raise loans worth $535 million to finance acquisition of three Boeing planes, including two aircraft that will be used for ferrying VVIPS, a senior airline official said.

However, the disinvestment-bound carrier has reduced the required loan amount by around $20 million in less than three weeks after floating a tender where it had sought loan up to $555 million for buying the three aircraft.

The delivery of three B777300 ER planes is scheduled to be completed in February next year, with two expected to be bought in January.

Issuing a revised tender, the airline has solicited interest from lenders for loan worth up to $535 million, for which two separate term sheets would be inked.

At current exchange rates, the loan would be to the tune of around Rs 3,460 crore.

Out of three aircraft, two are to be acquired in January 2018 and those would be for the use of VVIPS, the official said.

After making required modifications, the two planes would join the fleet that are generally used to carry President, Vice President and Prime Minister, the official added.

As per the purchase agreement with Boeing, Air India is to buy 15 B777-300 ER aircraft and it has already taken delivery of 12 such planes.

According to the revised tender document, one term sheet would be for two aircraft that are to be delivered in January next year and the loan amount required is up to $400 million. The figure translates to around $200 million for each plane.

For the remaining aircraft, a separate term sheet would be inked for a loan of up to $135 million.

The specific reasons for revising downwards the proposed loan amount to $535 million from $555 million could not be immediately ascertained.

"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 said that the Government of India has indicated that they would issue its guarantee for the bridge financing of B777-300 ER aircraft for a period of 12 months or till the date the loan is refinanced whichever is earlier.

No commitment fee would be paid to the bidder and that the "pre-payment/ short closure of the bridge loan should be allowed without any extra cost" to the airline, it added.

In 2006, Air India placed orders with Boeing for 68 aircraft -- 27 Dreamliners, 15 B777-300 ERS, eight B777-200 LRS and 18 B737-800s.

Of these, the state-run carrier has already taken the delivery of 65 planes.

At present, the flagship airline has a fleet of 115 aircraft.

The B777-300 ER aircraft owned by Air India has 342 seats for passengers. It is the world's largest twinjet a range of 5,240 to 8,555 nautical miles (9,704 to 15,844 km). It is commonly referred to as the “Triple Seven”. NEW DELHI: Scouting for funds, Air India is in advanced discussions with public sector lender SBI for sale of at least two residential properties that could net nearly Rs 50 crore, airline and banking sources said.

While the government moves ahead with the process for strategic stake sale, the loss-making airline continues to work on the strategy to divest non-core assets.

Saddled with more than Rs 50,000 crore debt, Air India recently sought loans worth over Rs 1,500 crore to meet working capital requirements.

Against the backdrop of the severe financial crunch, the airline's talks with the State Bank of India (SBI) assumes significance in terms of raising additional monetary resources.

The discussions between Air India and SBI are at an advanced stage with respect to sale of two residential properties in South Mumbai, sources said.

While the final contours of the deal are being worked out, an airline source said the sale is expected to fetch around Rs 46 crore.

Despite trying to dispose of such assets, so far Air India has managed to sell only four of its flats in Mumbai to SBI for Rs 90 crore.