MUMBAI : The board of state-run Air India said it approved the purchase of 50 long-range Boeing aircraft after intense lobbying by the US aviation giant and Europe’s Airbus for the multi-billion dollar deal.
The contract worth 300 billion rupees (7 billion dollars) is subject to federal government approval, Air India said in a statement after a board meeting in India’s financial capital.
“Air India has made the right decision as all our aircraft are fuel-efficient and incur low maintenance costs,” Boeing India president Dinesh Keskar said Tuesday.
“It will save Air India around 300 million dollars every year in fuel costs and this saving will be every year which is why Air India chose us as a partner in its future growth,” he said.
The decision, following more than a year of hectic negotiations, was greeted with dismay by one European diplomat who has been following the talks.
“It is a big disappointment,” he said.
US Transportation Secretary Norman Mineta visited New Delhi this month to lobby for the airline to purchase Boeing aircraft and French Transport Minister Gilles de Rubien, who was in New Delhi Monday, pushed Airbus’ case.
“Airbus planes are the best in the world and we are sure that the order will be bagged by Airbus,” Rubien told reporters in the Indian capital.
The state-run airline will buy eight B777-200 LR, 15 B777-300 ER and 27 B787 Dreamliner medium-capacity, long-range aircraft, the statement said.
The airline originally said it expects the planes to be delivered over a period of 10 years starting in 2006, during which Air India plans to increase seat capacity by 12 percent annually.
“The final delivery schedule can be decided only after the necessary government approvals have been obtained and orders are placed,” it said.
Air India said late last year that two-thirds of the purchase will be on a firm order basis and one-third on option.
Air India is currently negotiating with banks to finance the purchase.
The airline, which is wholly government owned, also approved an initial share sale to finance its expansion plans, the statement said. The airline didn’t say how much of a stake it may sell or how much money it plans to raise.
The airline has been marginally profitable in the past three years, with net profit of 1.05 billion rupees (24 million dollars) for the year ended March 2004. The financial results for the current year have not been released by the government.
If the share sale is successful, Air India would join Jet Airways as the only other airline listed on the nation’s stock exchanges.
Jet Airways sold a 20 percent stake or 17.2 million shares in February and raised 374 million dollars.
Earlier Monday, the country’s civil aviation minister said the cabinet would rely on the judgment of the Air India board on which aircraft to buy.
“The airline board is independent to take the decision and we are no way involved in it as it is a techno-economic decision,” aviation minister Praful Patel said.
India’s other state-owned carrier, Indian Airlines, also plans to buy 43 new aircraft at an estimated cost of over two billion dollars.
Other private Indian airlines, such as Jet Airways, Sahara and Deccan, are planning fleet expansions as the country’s aviation sector is poised to take off after the government allowed them to fly international routes.
The number of air travellers in India rose by 26.5 percent in the six months to March with 18.52 million people boarding flights.
The number of passengers is expected to hit 50 million in the next five years as a slew of new private airlines enter the skies on the back of a booming economy.
http://www.channelnewsasia.com/stories/afp_world_business/view/144638/1/.html
Some other Boeing related news..
Air Canada has made firm orders for 32 Boeing jets at a list price of $6 billion.
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April 27, 2005 at 8:11 am