Indian to raise $530 mn, buy aircraft

State carrier Indian is planning to raise around $530 million (Rs 2,350 crore) as long-term loan funds for financing the purchase of the first ten of its newly ordered Airbus aircraft.

''We are seeking offers from Indian and foreign banks and FIs for long-term loan funds of around $530 million for financing the delivery payments for purchase of first ten Airbus aircraft and related equipments which will be delivered between October 2006 and March 2008,'' a senior Indian official said.

In a bid to spread its wings in the growing Indian aviation market, it had recently signed a $2 billion deal with Airbus Industrie for purchasing 43 aircraft including 19 A319, four A320 and 20 A321 which are scheduled to be delivered between October 2006 and March 2010. ''We have already signed up an agreement with ICICI Bank for $152 million for financing of pre-delivery payments for all the aircraft,'' the official added. The funds—which Indian is planning to have for a term of over 10 years—will be used financing the delivery payments to aircraft manufacturer for aircraft, engine manufacturer for spare engines and other suppliers for simulator.

Meanwhile, the airline had earlier signed a memorandum of understanding with ICICI Bank to fund its pre-delivery advance payments (PDPs) to buy 43 aircraft where ICICI Bank would arrange and underwrite the $152-million external commercial borrowing (ECB) to be taken from a syndicate.

This is the second time the airline is entering the leasing market as it did not get an adequate response to its earlier tender. The airline is planning to use these lease aircraft to start operations to the UK, the US, Canada and Australia.

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