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GoAir to sell and lease back 10 planes

business Updated: Apr 20, 2007 16:24 IST
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Unlisted budget carrier GoAir plans to sell and lease back planes and dilute equity to fund its expansion over the next three years, GoAir CEO Jeh Wadia, told reporters in Mumbai.

The airline plans to sell and lease back 10 of the 20 Airbus A320 planes it has ordered. ''We have finalised sale and lease deals and are weighing whether to own the other planes (10 Airbus A320s) or opt for the same route,'' said Wadia.

Sale and lease back is a popular mode of financing used by airlines across the world to tide over difficult times and fund growth. Leasing companies are willing to pay around $40 million for an Airbus A-320 when the aircraft market is tight.

GoAir is also in talks with financial investors to place equity, but would do so only at the ''right price,'' said Wadia said at a meet to announce bollywood actress Preity Zinta as its brand ambassador. ''We have a few investment proposals and are looking at them," he said.

GoAir, part of the diversified Wadia group, plans to expand its fleet to 18 planes by December 2008 and 34 by 2011. Right now, GoAir has a fleet of five planes and enjoys a five per cent market share.

Airlines like Air Deccan, Spicejet and Jet Airways have managed to book profits of $3-6 million on each aircraft under the sale and lease back route. Spicejet raised about $65 million from the Tata group and a clutch of funds in February and Deccan is close to finalising a deal to sell stake worth $75-100 million.

(With inputs from Reuters)