Air India plans to sell 3 Boeing 777 aircraft

By: | Updated: June 15, 2015 10:38 AM

With debt going up to Rs 50,000 crore, the sale or lease of aircraft will help Air India get some financial relief.

Air India airbusIn total, Air India has 27 wide-body aircraft typically used for international flights and in-between important destinations like Delhi and Mumbai. (Reuters)

In its efforts to reduce debt, state-owned Air India is looking for buyers for its three Boeing 777-200 LR wide-body aircraft, civil aviation ministry officials said.

The national carrier owns 15 Boeing 777s, which includes 12 B777-300 ER. Though pilots complain that the 777s are grounded and unutilised, and insured at very high costs, civil aviation officials refute such claims. “All Boeing 777 planes are in use, but still there are three 777-200 LR aircraft that are up for sale or lease,” the officials said.

In total, Air India has 27 wide-body aircraft typically used for international flights and in-between important destinations like Delhi and Mumbai.

Experts said that sale of aircraft will release some burden from the airlines. “It is better to run the planes on lease than letting it remain unutilised,” said an aviation analyst.

Earlier, the Air India management was alleged to have put six of the aircraft out-of-service, and insuring them at high cost. But ministry officials said that insuring the aircraft is a regular practice, and all aircraft are insured against both own damages and third party risks.

The airlines has been loss making since its merger with Indian Airlines in 2007. Also, as the debt ballooned to Rs 50,000 crore the sale or the lease will help in getting some financial relief. The carrier’s debt increased after the orders for new planes it placed in 2005.

Based on the Techno-Economic and Negotiating Committee report, Air India was given the permission of buying 68 planes from Boeing, which consisted of 23 Boeing-777, 27 Boeing-787 and 18 Boeing-737 aircraft. Since then the financial position has only deteriorated for Air India.

Earlier this year it wanted to review its Boeing 787 Dreamliner orders. Already 20 planes have been delivered and seven remained. The orders of the remaining seven Dreamliners have been canceled. “There were grand plans with the Dreamliners, but we have not been able to fill the seats,” said the officials. The Dreamliners were expected to have passenger load factor (PLF) of 80%, but all its international flights put together has a PLF of about 70%, and in all the international routes that the planes fly make losses.

In 2015-16 Air India is expected to become operationally profitable, EBITDA positive by 2018, cash positive by 2019, and make net profit positive by 2022. The sale of planes, and leasing a few more will only help Air India meet its targets.

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