Air India’s MRO arm in talks with Vistara, SpiceJet for Boeing 737 contracts

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Mumbai | Published: December 16, 2019 5:13:19 AM

Officials of AIESL said they are unable to chalk out long-term plans for AIESL in the wake of the upcoming divestment of the airline.

There is little clarity on the treatment of AIESL post disinvestment.

India’s flagship carrier Air India’s maintenance, repairs and operations (MRO) arm, Air India Engineering Services (AIESL) is in talks with Vistara and SpiceJet to enter into long-term MRO contracts for maintenance of the airlines’ Boeing 737 fleet, sources said. The entity already maintains GoAir’s Airbus A320 fleet. However, company officials said they are ‘treading cautiously’ on long-term contracts ahead of disinvestment plans.

Officials of AIESL said they are unable to chalk out long-term plans for AIESL in the wake of the upcoming divestment of the airline. In a recent response in Parliament, civil aviation minister Hardeep Singh Puri said the government plans to sell 100% in Air India and is in the process of inviting expressions-of-interest.

Meanwhile, there is little clarity on the treatment of AIESL post disinvestment. Ashwani Lohani, chairman, Air India in a post on a social networking website on Saturday said the airline needs to ‘survive till it is sold’. Air India posted a net loss of around Rs. 8,556 crore in financial year 2018-19.

Only around 10% of AIESL’s revenue comes from third parties. A majority of the entity’s business goes into in-house MRO operations. The government-owned company has been lobbying with the civil aviation and finance ministries to reduce the goods and services tax (GST) on MRO services from 18%, in order to offer competitive prices globally. “We have a lot of issues impacting our profit margins including GST and royalties. 18% GST is very high,” an official said. Lohani on Saturday came out in support of employees of Air India and said it is ‘impractical’ to expect a radical improvement in the airline’s performance ‘in this environment of disinvestment’.

AIESL is the biggest aircraft MRO entity approved by the directorate general of civil aviation in India with the capacity undertake aircraft recovery and repair most major aircraft engines including Pratt & Whitney and General Electric engines.

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