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US Exim to finance A-I fleet expansion

With the first aircraft set to be delivered in November, the process of payment would start in February 2006.

india Updated: Jan 29, 2006 11:36 IST

The Export-Import (Exim) Bank of the US will provide 85 per cent of the export support credit to Air-India for the airline's grand fleet acquisition plan of 68 Boeing aircraft for $8 billion, industry sources said.

"The Exim Bank will start paying portions from the 85 per cent of the committed cost depending on the initiation of the manufacturing and delivery schedules of the Boeing aircraft," an Air-India official said.

"With the first aircraft set to be delivered in November, the process of payment would start sometime in February," the official said, adding the payback will be spread over 10-17 years.

The state-run carrier is arranging the remaining 15 per cent of the acquisition cost by way of interim loans from local sources and its own kitty, sources said. The carrier has already made an advance payment of $430 million to Boeing.

The move follows a green signal from the government after an empowered group of ministers negotiated with the Seattle-based Boeing Commercial Airplanes for a financial discount of about Rs 10 billion ($222 million).

Air-India also secured Boeing's commitment for investment in maintenance, repair and overhaul base, in addition to a pilot training facility in India, towards which the US company will invest a total of $185 million.

All the aircraft -- comprising 23 Boeing 777s and 27 Boeing 787-800 Dreamliners for Air India and 18 Boeing 737-800s for its low-cost arm Air-India Express -- will be delivered by 2011.

A-I currently has a fleet strength of 38, including 22 aircraft on lease, while the low-cost subsidiary operates three aircraft, of which one is on lease.

First Published: Jan 29, 2006 10:08 IST