Indian signs agreement with Airbus and Jupiter Avaition for MRO venture

10 May 2007

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Mumbai: Indian Airlines signed a tripartite term sheet agreement with Airbus and European Aerospace and Defence group's (EADS) partner Jupiter Aviation for the setting up of an maintenance, repair and overhaul (MRO) facility as a joint venture on Thursday. The agreement is still at a formulation stage and would turn into a formal memorandum of understanding only after the modalities are finalised and the third partner for the venture is identified.

Unlike Boeing, which is directly investing $100 million in a MRO facility in Nagpur, as part of its commitment when it signed the deal to sell 68 aircraft to Air India, Airbus, which has a similar commitment with Indian, is making its partners to invest in the MRO venture. To adhere to its commitment, Airbus will make one of its 14 network partners join the venture. Once the partner is identified, Airbus would exit from this agreement.

Airbus executive vice president, marketing, Dr Kiran Rao said, "This venture will be fully supported by us and this would help us to fulfill our MRO obligation. But independently Airbus would invest $1 billion in India in 10 years."

At the beginning of the year, Airbus' parent company EADS appointed Bangalore-based Jupiter Aviation as its exclusive strategic partner for MRO and life support of commercial aircraft in India. Jupiter Aviation is a venture floated by Rajiv Chandrasekhar, who exited from BPL Mobile and BPL Communications.

According to Jupiter Avaition CEO and MD, Ravi Narayanan, while Indian would provide hangers and related facilities for the joint venture, most of the investment will come from Jupiter, which is likely to invest Rs300 crore over two phases.

"We are on schedule and will start operations by October. This would be the first, biggest and most comprehensive MRO in India. From the beginning we will achieve critical mass," said Jupiter chairman, Rajiv Chandrasekhar.

According to Indian CMD Vishwapati Trivedi, the airline would gain lots of cost advantages from the new venture. "We will have priority in repair and maintenance work and will get 20 per cent discount in our bills. This is a step in the right direction," he said.

As per the term sheet this MRO venture would begin its activities in Delhi with A320 hangers, followed by check maintenance of ATR aircraft. In phase two the MRO would cater to wide body and other aircraft types including the super jumbo A380.

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