The Air India board on Tuesday approved the sale of five Boeing 777-200 LRs to Abu Dhabi-based Etihad Airways. The transaction is likely to fetch around $350 million (Rs 2,100 crore) to the airline. The proposal will now require clearance from the Union Cabinet.
“The delivery of aircraft to Etihad Airways is scheduled to commence from January 2014. A note would now be prepared and sent to the Cabinet for approval.” said a senior official.
Air India owns a fleet of 20 Boeing 777 200-Long Range and Boeing 777 300-Extreme Range that are operated on the routes to the US, Europe, China, Japan, Korea and Saudi Arabia. Out of the 20, eight 200-LRs are flown to Seoul, Hong Kong, Tokyo and Osaka but operational profitability has been a concern.
The accruals through sale would be utilised to settle outstanding loans against the aircraft.
“There will be savings in principal and interest payment of about Rs 370 crore a year after the planes are sold,” informed a senior Air India official.
The sale of the aircraft will also help improve Air India’s financial performance as these planes have high operating cost and the airline has been struggling to achieve break-even on routes, where it has deployed the aircraft.
The national carrier plans to replace these Boeing 777s with Boeing 787s to Europe and Far East routes to address the route and plane mismatch in its operations.
Air India will deploy Boeing 777 300-ER to Newark, while Dreamliners will replace 777 200-LRs to Seoul, Hong Kong, Tokyo and Osaka.
Etihad Airways has said it plans to deploy the aircraft on a new route between Abu Dhabi and Los Angeles starting June 2014. The Boeing 777-200-Long Range has a design range of 17,370 km, allowing it to connect almost any city in the world from Etihad Airways’ hub at Abu Dhabi, Etihad had said in a statement.
Etihad Airways currently flies to New York, Chicago, Washington DC and Toronto in North America, and to São Paulo in Brazil, and has stated its intention to add new services to both continents using the new aircraft.