The US Exim Bank agreed on Tuesday to guarantee a loan of $1.2 billion being raised by the National Aviation Company Limited (NACL) to fund the purchase of 17 aircraft from Boeing Company, company Chairman and Managing Director V. Thulasidas said.
The national flag carrier formed after the merger of Air India and Indian Airlines signed a deal with Boeing last year to buy 68 new aircraft. Under Tuesday’s agreement the US Exim Bank has also agreed to guarantee 85 percent of the American component of the overall deal that would cost NACL $11.6 billion.
Thulasidas said the 17 aircrafts would be delivered by December 2007. “Besides this, there is a preliminary agreement under which the US Exim Bank will provide the guarantee for fund the balance 51 aircrafts that will be delivered by 2011,” he told HT from New York.
The US Exim Bank would provide the guarantee for over $5 billion, another company official said. “Though the deal size is around $11.6 billion, many of the components such as training, spare parts and purchases from rest of the world would not be provided cover under the US Exim Bank’s guarantee,” the official added.
The interest rate on these loans would be below London Inter-bank Offered Rate (LIBOR), which is among the most common of benchmark interest rate.