A day after its lenders approved its debt restructuring plan, Air India today decided to go in for sale-and-leaseback option for Boeing 787 Dreamliners instead of their outright purchase, as its board reviewed the latest financial position of the cash-strapped company.
The board, which reviewed Air India's operations and the implementation of its turnaround programme and Financial Restructuring Plan, also decided to lease out excess capacity of two Boeing 747-400 planes and some 777-200 LR aircraft after the Dreamliners were inducted, a spokesperson said.
As per AI's plans, the acquisition of 14 of the 27 Boeing 787 Dreamliners that will join its fleet by 2014, is likely to be made through sale-and-leaseback.
Sale-and-leaseback or leaseback in short is a financial transaction where one sells an asset and leases it back for the long-term. Hence, one is able to use the asset continuosly but does not own it.
The board, at its meeting here today, approved the issuing of Request for Proposal (RFP) for the B-787 planes under leaseback mechanism "pending a final clearance from the government", the spokesperson said.
The airline's top brass also reviewed the decision of the 13-bank consortium, led by State Bank of India, to approve the debt restructuring programme, subject to certain clarifications from the Reserve Bank of India which had last week given a nod to it.
Seeking to turnaround ailing Air India, the government is considering a nearly Rs 30,000 crore package for the state-owned national carrier over a period of 10 years.
According to the proposal, government is considering writing off Rs 4,500 crore cash loss of Air India, infusing additional equity of Rs 6,750 crore and Rs 17,000-18,000 crore for its fleet acquisition programme.