The Hindu Business Line : AI clears 28 aircraft buy plan at Rs 10,000 cr

THE Air India (AI) board on Saturday approved a proposal to acquire 28 aircraft — 10 long-range Airbus A-340 and 18 short-range Boeing 737-800 — at an estimated cost of slightly over Rs 10,000 crore.

Briefing presspersons after the board meeting here, the airlines official spokesperson said that the total cost of replacement/acquisition of aircraft — the biggest one-time acquisition plan for the Maharaja — would be a little more than Rs 10,000 crore. Both varieties of aircraft are to be powered by CFM engines. The board's decision is based on the consideration of the in-house techno-economic negotiating committee report.

Officials said that the two types of aircraft have been chosen purely on their "financial ranking" with both the varieties showing a positive rate of return on the investment. Furthermore, unlike earlier proposals, which were being examined by the airline, the board has decided not to look at the options route.

While AI plans to induct 28 aircraft during the period 2004 to 2010, officials were tight-lipped on which aircraft is to be inducted first — the 272-seater Airbus 340 or the 146-seater Boeing 737-800.

AI will now have to prepare a project report and send it to the Ministry of Civil Aviation, which, in turn, will forward the report to the Planning Commission to set the ball rolling for clearances by the pre-Public Investment Board (pre-PIB) and the PIB.

The Maharaja will be able to sign the letter of intent (LoI) with the two aircraft manufacturers only after the Cabinet Committee on Economic Affairs (CCEA) approves the project proposal.

Officials indicated that AI might have to look at the financing options available in the international market to fund the acquisition, something that the airline has done in the past.

The AI board also decided to expand the scope of the voluntary retirement scheme (VRS) being offered to the airline staff to include personnel in operational areas such as pilots and engineers.

"We believe that the VRS package pays back in 18-24 months," airline officials said. The exact amount of funds that will flow out of AI's coffers will be clear only when the number of people applying for the VRS package is known.

This apart, the board also decided to look at "a low-cost alternative" for the airline.

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