Air India formalises deal to sell 5 Boeing 777s to Etihad
07 December 2013
Debt-laden national carrier Air India has formally agreed to sell its five wide-body Boeing 777 aircraft to Abu Dhabi flag carrier Etihad Airways and is awaiting government nod for the deal, which it said, is likely soon.
Air India officials had signed an agreement formalising the deal with their Etihad officials in Abu Dhabi earlier this week, sources said.
Etihad Airways, the national airline of the United Arab Emirates, had in October, signed a letter of intent with Air India for purchase of five Boeing 777-200 LRs, the longest range passenger aircraft in operation, to support its accelerated route expansion plan.
The formalisation of the agreement to sell these fuel-guzzling planes paves way for the sale of Air India's premium assets, which is a part of the airlines turnaround strategy, and could, over time, make the disintegration of Air India irreversible.
The wide-body Boeing 777-200 LR (Long Range) planes, having an average age of six years, are likely be delivered to Etihad by around March next year. Etihad has already announced plans to deploy them on long-haul routes like Abu Dhabi-Los Angeles from June next year.
Air India, saddled under huge debt, had put eight of these aircraft for sale, but as there were no takers earlier, it had to issue the tender twice.
Civil aviation minister Ajit Singh had, last month said he was of the firm belief that the future of Air India was privatisation, although he rued the fact that the time was not opportune for the UPA government to announce the biggest privatisation deal.
Etihad, made the first-ever investment in Indian carrier Jet Airways, after the government announced a change in FDI policy, by striking a Rs2,058 crore deal to buy 24 per cent stake in Jet Airways as part of a strategic alliance to expand its global network.
Etihad said it planned to use the 777-200 LRs on the airline's new route between Abu Dhabi and Los Angeles, which starts on 1 June 2014.
Etihad expects Air India to deliver the aircraft from the beginning of 2014, after which they will be re-fitted in a three-class cabin configuration similar to the other aircraft the Etihad Airways fleet.