Friday, October 28, 2016

Air India in talks with LIC for Rs. 10,000-cr aircraft acquisition loan

Air India is in talks with the Life Insurance Corporation of India to provide a loan of up to Rs. 10,000 crore to Air India to help finance the acquisition of six Boeing 787 and three 777 aircraft. The nine aircraft, which are to be delivered in 2016-17 and 2017-18, are a part of the 68-Boeing aircraft order that the airline had placed in 2005.

The proposal was discussed in a meeting that Ashwani Lohani had with the LIC Chairman recently.

Air India will now have to approach the Union Cabinet to gets its approval to go in for the outright purchase of these nine aircraft instead of going in for a sale and lease back (SLB) arrangement as it had done when it signed the agreement for the purchase of 68 Boeing aircraft in 2005.

LIC is keen that AI own these aircraft so that the loan can be extended. Further, in case of a loan default, LIC can take over the aircraft instead of a leasing company, which would be the case if AI follows the SLB route.

Air India is taking up the matter with the Ministry of Civil Aviation pointing out the advantages of going with LIC for acquiring the nine Boeing aircraft under a rupee loan.
28/10/16 Ashwini Phadnis/The Hindu Business Line