Nacil to buy 3 planes with StanChart loan

AI has got the loan at 375 points above the London interbank offered rate and is now trying to get it refinanced to lower interest rates by getting a sovereign guarantee and a backing from the US Exim bank. Nacil had last month invited requests for proposals (RFP) from domestic and international financial institutions to raise $475 million for acquiring three Boeing 777-300 ER planes.

In 2005,Air India had placed orders for 68 aircraft-18 B737-800 planes,27 Dreamliners (B787-800) and another 23 B777 aircraft. Of the 23 Boeing 777s,15 are B777-300 ER planes and eight Boeing 777-200-LR aircraft. AI has already taken delivery of 18 B737-800s and eight B777-200 LRs. Of the 15 B777-300 ER aircraft,it has received 10 planes,while five more are to be delivered over the next 15 months.

Analysts estimate that AI will have to make payments of Rs 22,000 crore for aircraft deliveries this year as against Rs 12,000 crore last year. Also,a recently appointed audit committee has asked AI to look at ways of bringing down its annual interest burden and repayment costs on the acquisition of new aircraft. The committee has asked the management to tighten up in such a manner that both the interest burden and repayment can be brought down. Annually,the airline is paying about Rs 2,600 crore as interest and repayments. The audit committee includes senior officials from the ministry of civil aviation.

The government has provided a sovereign guarantee for $7 billion of the combined value of $10 billion for aircraft acquisition. Technically,a government guarantee should ensure that the airline is able to secure funds at better rates of interest.