Air India seeks $500-mn bridge loan ahead of sale of another 3 Boeing 777s
19 April 2014
Loss-laden national carrier Air India is seeking a bridge loan of $500 million ahead of its planned sale of three Boeing 777s to raise funds for trimming its huge liabilities.
Air India is offering the aircraft as security and will repay the loan after it concludes a sale and lease-back arrangement of its new Dreamliners, it said, adding there will be no government guarantee for the loan.
The airline needs the $500 million loan for taking delivery of four Boeing 787 Dreamliner aircraft from an ongoing order, according to a tender document on the airline's website.
Air India is due to take delivery of four 787 aircraft between May and November.
The airline has invited offers from banks or financial institutions to arrange the bridge financing for a period of six months to one year.
The sale of the three Boeing 777s comes barely four months after Air India sold five of these planes to Gulf carrier Etihad Airways.
Air India is now offering another three Boeing 777-200 long range airplanes, powered with GE 90-110 engines, for outright sale through competitive global bidding.
Each of the three Boeing 777s being sold now have a seat capacity of 238, including eight first class and 35 business class seats.
While the commercial bids for these three five-year-old planes will open on 13 May, the technical bids will be opened at a later date, sources said.
The airline hopes to fly Boeing 787 Dreamliners on the long-haul global routes served by the 777s, over a period of time.
Air India has already taken delivery of 13 of the 27 Dreamliners the airline has ordered.
The sale of five B-777s to Etihad in December last year was estimated to have fetched over $335 million, which Air India had planned to use to pay off its outstanding debt.
The sale and lease back of the fuel-guzzling Boeing 777s and replacing them with Boeing 787 Dreamliners, which would result in huge savings, is part of Air India's turnaround strategy.
The airline also hopes to raise about $840 million by selling seven Dreamliners and leasing them back. The money earned through the arrangement would be used to pay off the bridge loans taken against these aircraft.
Air India has mandated the leaseback arrangement with Investec Bank for four Dreamliners and three with Deutsche Bank. It is slated to get six more Dreamliners this year.
Air India, which has an estimated debt and liabilities of over Rs20,000 crore, has recorded significant improvements in its financial performance parameters.
It estimates a 44-per cent reduction in its operating losses in 2013-14 and an almost 20 per cent growth in its operating revenue since the previous financial year.