Air India team to finalise $6 billion loan

A team from Air India will be going to Washington soon to formalise documentation for availing itself of a $6-billion loan from the US Exim Bank for purchase of Boeing aircraft. "The team will work on preparing all operative documents for Air India and Air India Express including the master lease agreement that would see the aircraft being leased to a Special Purpose Vehicle from which they would join the respective airlines," sources said. The loan constitutes about 85% of the cost of the aircraft with the airline tying up the rest of finances from commercial banks. Official sources added that the formalisation of the documentation would help the airline avail itself of the first tranche of $1.4 billion loan for acquiring 17 aircraft including 10 Boeing 737-800 and seven Boeing 777.

The loan will be of a 12-year tenure. Apart from Air India officials, the team will include lawyers from ABN Amro, ICICI and State Bank of India (SBI). In April 2005, the airline board approved a proposal to acquire 68 Boeing aircraft including 27 Boeing 787, 8 B 777-200 Long Range and 15 B777-300 Extended Range aircraft and 18 Boeing 737-800 aircraft for the 100% subsidiary, Air India Express. While the Boeing 737-800 aircraft will be used by Air India Express, the low-cost subsidiary of AI, the other aircraft being purchased will be utilised by the Maharaja to operate on existing and new routes. Air India is purchasing aircraft after a gap of more than 10 years. The airline has relied on leased capacity to meet its demand during the period.

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