- Vodafone rebuts P. Chidambaram's accusation blames Indian govt for collapse of $2 bn tax dispute talksWall Street falls after US Fed meeting, Facebook shares drop lateHarley-Davidson offers new EMI options for Street 750 buyers in IndiaCorporate scams: Sebi makes whistle-blower mechanism mandatory for listed cos
National carrier Air India will raise about $340 million (Rs 2,100 crore) by selling five Boeing 777-200 to Etihad Airways, an airline official told FE on Thursday.
The proceeds from the sale of the Air India aircraft, commonly referred to as 'triple sevens', will be used to pay off aircraft loans and allow the airline to save $100 million per year towards interest and maintenance costs on these aircraft.
“The funds realized from the sale of 5 Boeing 777-200 aircraft will go in extinguishing the loans taken against these aircraft and to that extent we anticipate a saving of $100 million per year towards interest and principal repayment as well as maintenance cost towards these aircraft. This would certainly strengthen the bottom line of the airline,” a senior Air India official had earlier told FE.
The middle-eastern airline which plans to use the aircraft to launch direct flights between between Abu Dhabi and Los Angeles from June, is expected to induct the aircraft into its fleet by April this year.
The Cabinet Committee on Economic Affairs had last November cleared the sale of the Boeing 777 aircraft to Etihad.
According to airline officials, Air India struggled to break even on routes where these aircraft were deployed, mainly due to its high operating costs which was the main reason for these planes to be put on the block.
However, the airline will be selling five of its triple sevens' for a mere Rs 420 crore per aircraft, as against about Rs 1400 crore it spent purchasing each of the aircraft. Air India paid about Rs 11,200 crore to buy 8 'triple sevens' after the deal was finalised in 2004.
Air India plans to line up the remaining three Boeing 777-200 LRs in its fleet for sale, officials said.
The airline currently has a total debt of close to Rs 44000 crore, half of which is aircraft related. Out of the balance nearly Rs 18, 000 crore represent long term working capital loans, the senior Air India official, mentioned above, had told FE.