Govt not keen on AI Boeing deal | delhi | Hindustan Times
Today in New Delhi, India
Jul 21, 2017-Friday
-°C
New Delhi
  • Humidity
    -
  • Wind
    -

Govt not keen on AI Boeing deal

India's national carrier Air India (AI) may not get the US-based Boeing 787 Dreamliner aircraft, as the government is reluctant to guarantee the loan AI wants to take to buy these modern planes.

delhi Updated: Oct 28, 2011 00:27 IST
Chetan Chauhan

India's national carrier Air India (AI) may not get the US-based Boeing 787 Dreamliner aircraft, as the government is reluctant to guarantee the loan AI wants to take to buy these modern planes.


The civil aviation ministry is adverse to AI's proposal to buy 27 Dreamliners costing R18,000 crore, considering its grave financial health, which does not appear to be on a road to recovery in the near future.

AI had placed an order for 68 planes to Boeing in 2006, of which 27 where Dreamliners, and another 43 to France-based Airbus, which the Comptroller and Auditor General (CAG) in its September 2011 report termed as a major reason for AI's financial crises.

The new airplanes from the two companies have come except the Dreamliners, which are expected to land in India this December, after a three-year delay. By March 2011, Boeing was scheduled to have delivered 18 of these premium aircraft to AI.

Despite over 84 new aircraft, AI is in a debt of R42,570 crore and had accumulated a loss of R22,000 crore on March 31 this year. Its debt burden will cross R60,000 if the Dreamliners are bought.

The CAG report and the airline's financial health appear to be two major reasons for the ministry requesting a GoM to cancel the order, despite AI claiming that it would lead to huge litigation costs.

The ministry is reluctant to support AI's bid to get a loan from foreign banks for Dreamliners, saying the government would be paying a huge cost - R6,600 crore - to keep the national carrier afloat in this financial year.

The ministry, in its proposal to the GoM, had said that the additional financial burden of R18,000 crore to buy Dreamliners will plunge AI into further financial crises. "The Dreamliners will improve efficiency of AI and are a good replacement for the aging fleet," said an AI official, who believe that the deal can prove to be a turning point for AI.

Civil aviation minister Vyalar Ravi had questioned AI's capability to pay back the loan.