Business Daily from THE HINDU group of publications
Monday, Dec 11, 2006
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Business Daily from THE HINDU group of publications Monday, Dec 11, 2006 ePaper |
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Airlines Logistics - Outlook Air India to finalise financing aircraft purchase by January Ashwini Phadnis
New Delhi , Dec. 10 Air India will finalise the structure of financing for its Rs 30,000-crore 68 Boeing aircraft acquisition programme in consultation with the Ministry of Finance and Ministry of Civil Aviation by January. The airline is examining two options for financing the aircraft acquisition. The first would entail creation of a special purpose vehicle (SPV) that would purchase the aircraft and Air India and Air India Express would lease them from the SPV. The second option would see Air India take a loan that would be directly reflected in its books. Sources said that the option of the airline taking a direct loan was the most preferred one, for a variety of reasons including that Air India would own the aircraft. In case the airline decides to go in directly for a loan, the mandated bankers would provide funds to Air India with the Exim Bank providing guarantee for 85 per cent of the cost of the aircraft. In addition, the Government would guarantee the loan. The first of the 68 aircraft that Air India is to acquire arrived earlier this week and was financed through internal accruals, sources said. The airline will pay the Government a fee of 0.5 per cent of the amount guaranteed, while Exim Bank will charge a one-time exposure fee of three per cent. Air India is to go ahead with the financing despite the proposed merger with Indian to be in a better position to take on competition from international airlines.
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