The Hindu : Business : AI fleet acquisition to be taken up today

Online edition of India's National Newspaper
Thursday, Oct 13, 2005

Business

Business

AI fleet acquisition to be taken up today

S. Anil Radhakrishnan

The programme involves an outlay of Rs. 35,000 cr.

To acquire 68 new aircraft Will raise funds from the market Air India Express to get 18 aircraft

THIRUVANANTHAPURAM: The Rs. 35,000-crore proposal of Air India (AI) to purchase 68 aircraft to fly to new destinations and to cater to the flights of Air India Express to the Gulf and Southeast Asian destinations would come up before the Public Investment Board (PIB) on October 13.

Disclosing this, the Chairman and Managing Director of Air India, V. Thulasidas, said the PIB clearance was mandatory for most proposals of public sector undertakings above a fixed amount. The fleet acquisition proposal, which is expected to be cleared by the PIB at its meeting on Thursday, will be sent to the Union Cabinet for its approval.

Of the 68 new aircraft to be acquired by AI, 18 would be for Air India Express, set up under Air India Charters, a fully owned subsidiary of Air India. The remaining 50 aircraft would be for Air India. Of this, 27 would be Boeing 787 aircraft. "The dream liners" were expected to join the fleet of AI by 2008, he said.

As many as 15 aircraft would be Boeing 777-300 ER (Extended Range) and eight Boeing 777-200 LR (Long Range). Mr. Thulasidas said the B 777-300 LR would be deployed for the proposed non-stop flight operations of AI to the U.S.

The fleet acquisition is the biggest ever contract in the history of AI and in the Civil Aviation sector. It would need at least four to five years after the contract was signed to get all the aircraft in the AI fleet.

Hedging

The national carrier has decided to hedge 10 per cent of the aviation turbine fuel (ATF) that it uplifts from next year. Hedging on ATF, adopted by major international airlines, is forward selling and buying of ATF to guard against fluctuating fuel prices. Mr. Thulasidas said it was for the first time that AI was going in for hedging.

The revenue for 2004-05 was Rs. 7,630 crore and the expected revenue for 2005-06 was Rs. 8,097 crore. The CMD said the decision to increase the equity base from Rs. 153 crore had made the management to go for the initial public offer (IPO) of equities. "We will raise funds from the market and the employees of AI will have option. The character of AI will change after the IPO. It will be more of a business venture than a PSU," he said.

The proposal to raise the equity had been cleared by the AI board and an advisor had been appointed. "We are expecting the report within one-and-a-half months. We will go to the Government for approval after that to the market by 2005-end or 2006."

The national carrier had been able to achieve an annual growth of 25-30 per cent. The revenue growth last year was 23 per cent. The airline had carried 4.4 million passengers last year and has targeted to fly five million passengers this year.

Printer friendly page
Send this article to Friends by E-Mail

Business