Emirates' Airbus buy to eat up AI biz

The financial trouble in Dubai has not dented the expansion plans of Emirates Airline, which has managed to raise $1.13 billion for adding six new giant Airbus A380 aircraft to its fleet.
The acquisition of these new aircraft spells trouble for Air India (AI) as it is at the receiving end of fierce international competition and has been forced to draw up plans to withdraw flights since it is not getting enough passengers on some routes.
These include the non-stop Mumbai and New Delhi flights to New York. According to Air India sources, some of its flights to Paris were also not getting high passenger loads. With one of the new A380 aircraft being introduced on the Paris route by Emirates, competition is likely to become even tougher for Air India.
While one of the new aircraft joined the Emirates fleet on Sunday, the second will be inducted later this month followed by the remaining four in 2010. The fuel-efficient Airbus A380 has a huge capacity that can carry over 500 passengers resulting in high economies of scale in commercial airline operations.
Emirates has had no problems in raising over $ 1.13 billion for financing the acquisition despite the financial turmoil in Dubai. The first agreement, covering three A380 aircraft, has been undertaken with Citibank, backed by a guarantee from the European Export Credit Agencies (ECAs). A second financing agreement covering the remaining three A380 aircraft has been arranged through Doric Asset Finance.
This clearly shows that the European banks do not see the Dubai real estate crisis impacting the airline.
14/12/09 S.P.S. Pannu/Mail Today/India Today

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Categories: Foreign Dec 2009, NACIL Dec 2009