Air India to go ahead with acquisition of Boeing 787s

A strong case for the acquisition of the Dreamliner as per the original 2005 order was made in the presentation and a case made out that the medium-capacity, long haul aircraft was absolutely necessary for the expansion of Air India

New Delhi: Air India would go ahead with the acquisition of Boeing 787 Dreamliner aircraft as part of its overall expansion programme and seek Indian government’s nod for it, reports PTI.

A decision to this effect is understood to have been taken by the Air India board which met here on Thursday in the backdrop of civil aviation minister Vayalar Ravi’s statements that the ailing airline did not have enough money to go in for a massive fleet acquisition plan.

While the airline has placed orders for 27 Boeing 787s with the first delivery expected later this year, the Group of Ministers (GoM) headed by finance minister Pranab Mukherjee, which is reviewing its turnaround plan, is likely to take a final decision in this regard, the sources said.

At the meeting, the board also reviewed the airline’s liquidity position and infusion of funds from the government, an airline spokesperson said, adding that Air India has so far received Rs1,200 crore by way of equity infusion in 2011-12.

On the aircraft acquisition issue, the board reviewed the modified turnaround plan prepared by SBI Caps in which suggested ‘a scenario for expansion’ if Air India was to grow as per the growth rate of the aviation market, he said.

The acquisition of Boeing 787 deal is understood to have been part of this modified turnaround plan and expansion programme and a presentation on the Dreamliner acquisition was made at the board meeting.

The turnaround plan was based on the recommendations of the committee of officers from the finance and other ministries, which had earlier suggested that “a scenario for expansion should be prepared if Air India was to grow as per market growth rate”.

A strong case for the acquisition of the Dreamliner as per the original 2005 order was made in the presentation and a case made out that the medium-capacity, long haul aircraft was absolutely necessary for the expansion of Air India, the sources said.

They said the planes, made of composite materials and are known to be very fuel-efficient, were an inalienable part of the route expansion plan of the ailing carrier.

Air India’s 68 aircraft deal, included the acquisition of 27 of these aircraft which was at that time on the drawing board. The list price of a Boeing 787-8 last year was $185.2 million.

This was the first meeting of the Air India board which was attended by the new CMD Rohit Nandan.

The board also reviewed the performance of the national carrier in August and noted the ‘significant achievements’ after the turnaround plan has started being implemented.

While passenger revenue increased by 12.3% from Rs889 crore to Rs998 crore between August this year and the same month last year, its passenger count went up from 1.07 million to 1.09 million, a growth of 1.8%, the spokesperson said.

The passenger load factor rose from 64.3% to 73.1% on domestic sectors and on the entire network, including international, from 67.7% to 70.3%.

The yield per revenue kilometre (RPKM) went up by 15% on international sectors, while on domestic sectors, it grew by 23.2%.

As part of a formality, the board approved the nomination of new CMD Mr Nandan on the various committees of the board and on the board of the AI-SATS, a joint venture of Air India and Singapore Airport Terminal Services for ground handling.

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