Air India seeks $475 million loan to buy three Boeing 777 ERs

Moving ahead with its fleet expansion plan despite a cash crunch, Air India is seeking a long-term loan of $475 million (Rs2,107 crore) from banks and financial institutions to acquire three long-haul Boeing 777s, according to a PTI report.

A day after its board met in Mumbai on Tuesday with four new directors, the National Aviation Company of India Ltd (NACIL), which runs the national carrier, invited offers from Indian and foreign banks and financial institutions asking them to submit their bids by 10 May, the news agency said quoting unnamed airline sources.

NACIL had previously tied up with the institutions for financing a 50-aircraft acquisition project, of which the national carrier has so far taken delivery of 17 new planes in three tranches of seven, three and seven, the sources said.

The entire project comprises purchase of eight Boeing 777-200 (long range), 15 B 777-300 (extended range) and 27 B-787 Dreamliner aircraft fitted with GE engines. The carrier now wants a long-term loan fund of $475 million to finance the purchase of three B777-300 extended range planes as well as a spare engine scheduled for delivery in 2010, the sources said.

While the government has provided a guarantee to support the financing for the project cost, the sources said NACIL would prefer to use this guarantee to the minimum extent to save on guarantee cost.

At the board meeting, the airline also named expatriate Gustav Baldauf as its chief operating officer. Baldauf had served as the executive vice-president (flight operations) of Austrian Airlines and earlier as vice-president of Jet Airways.