Air logistics firm Gati Ltd on Wednesday announced termination of its wet lease agreement with state-owned National Aviation Co of India Ltd (NACIL) for five Boeing B737-200 cargo aircraft with immediate effect.
"Consequently, the freighters leased by Air India have also been withdrawn with immediate effect. However, the strategic alliance with Air India is being continued as usual without affecting air cargo movement business," Gati said in a statement.
NACIL is operating both domestic and international services of Air India.
Following the announcement, Gati's shares gained 1 percent to trade at Rs 40.45 per share. The total volume of shares traded was 1,890 at the Bombay Stock Exchange.
Air India Cargo transports 2,000 tonnes of cargo every day on both international and domestic sector through its dedicated freighters and cargo space in passenger aircraft.
When contacted, a senior Air India official said the development would not affect the company's expansion plans in the cargo sector.
Air India has already converted two of its Airbus 310s to freighters, catering to international cargo sector. Of the seven B737s it owns, three have been converted to freighters, he added.
Two A310s are likely to be added to the cargo fleet. The official, however, refused to give more details about Gati's suspension of the agreement.
The airline expects to have 40 freighters by 2015. "We are looking to convert six of our Boeing 747-400s (to freighters) by 2012," he added.