Cash-strapped ’s board has approved a sale-and-leaseback option for its 27 on order.
“The Air India board has approved issuing of a Request for Proposal for the Boeing 787 aircraft under a leaseback mechanism pending a final clearance from the government,” an airline spokesperson said.
The leaseback arrangement will help Air India to make full use of the asset while not having capital tied up.
The national carrier will also lease out two-400s and some long-range aircraft after it inducts the Boeing 787 aircraft, an airline spokesman said after the board members met Tuesday to review the company’s operations and its financial turnaround plan, which was recently approved by the country’s central bank.
Boeing is expected to start delivering 787s from December, after a delay of almost two years. However, there is no confirmation on the date when the aircraft will join the Air India fleet.
India’s federal cabinet is reviewing the purchase, looking at the financial health of the company. There is speculation that the government may approve the purchase of just 14 of the 27 aircraft ordered in 2005.
In Tuesday’s meeting the board members also reviewed the decision of the 14-bank consortium, led by State Bank of India, to approve the debt restructuring program for the airline.
Last week the Reserve Bank of India approved extension of the tenure of loans to the state carrier by five years with the loans now due for repayment after 15 years.
India’s federal government is planning a 300 billion rupees ($5.7 billion) aid package for Air India.
On Monday, civil aviation ministry officials, representatives from the airline and 14 lender banks finalized a bailout package, which is expected to roll-out over a period of 10 years.
The government is also planning to write off a cash loss of 45 billion rupees accrued by Air India and infuse an additional equity of 67.50 billion rupees and 170 billion-180 billion rupees for the airline’s fleet acquisition program, according to a civil aviation ministry official.
The total debt of Air India, consisting of aircraft loans and working capital loans aggregate 438 billion rupees. The working capital loan is 215 billion rupees while the aircraft loan is 214 billion rupees, latest figures show.