The Hindu : National : Government okays deal with Airbus

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Friday, Sep 09, 2005

National

National

Government okays deal with Airbus

Vinay Kumar

Indian Airlines to buy 42 aircraft at a cost of Rs. 9,890 crores The entire order will be executed in three or four years

NEW DELHI: The Government has approved the Indian Airlines-Airbus Industrie deal for purchase of 43 passenger jetliners at a cost of Rs. 9,890 crores (about $2.25 billion).

The Empowered Group of Ministers (EGoM), headed by Finance Minister P. Chidambaram, gave the clearance on Wednesday after it concluded talks with an Airbus delegation.

Minister of State for Civil Aviation Praful Patel said the IA could go ahead with the purchase of 19 A-319s, four A320s and 20 A-321s.

The new jetliners will replace 70 per cent of IA's fleet. This is the first IA order for new planes in the past 15 years.

Mr. Patel said the EGoM, constituted on August 25 to hold the final round of negotiations with the European consortium, was able to swing a reduced price at Rs. 9,890 crores, representing a discount of Rs. 349 crores. The airline could place its order within a fortnight and the first of the new planes would arrive in mid-2006, possibly by September. It would take three or four years for the entire order to be executed.

Industry sources say IA, which was the launch customer for A-320 in 1992 and which boasts of engine overhaul facilities, will have to shell out more money for upgrading engineering workshops.

The IA board approved the deal in April 2002 at a projected cost of Rs. 10,089 crores, which later rose to Rs. 10,237 crores. The Public Investment Board approved the deal at Rs. 9,475 crores in November last.

As part of the deal, Airbus would establish in India a $75-million training centre, equipped with new generation simulators, to help the domestic airline industry tide over shortage of trained pilots and commanders.

``Airbus has also agreed to establish a spare parts warehouse in India. It has also committed itself to setting up an MRO (maintenance, repair and overhaul) facility with private investors. The facility will mean an investment of about $100 million,'' Mr. Patel said.

The announcement of the IA-Airbus deal has come when the sixth India-European Union summit is on in India and when British Prime Minister Tony Blair is here.

The deal comes ahead of Prime Minister Manmohan Singh's stopover in Paris this Sunday when he will meet French President Jacques Chirac. Britain and France are the leading partners in the European consortium, headquartered in Toulose, France.

Air Deccan and Kingfisher also have Airbus A-320 in their fleets and both the private domestic carriers have announced plans to purchase 60 A-320s over the next three or four years.

The latest private entrant, IndiGo, stunned the aviation sector, announcing plans to purchase 100 A-320s at the Paris air show this summer.

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