EADS in tie-up talks with Jupiter Aviation

EADS, the ¤34.2 billion aerospace and defence major, is negotiating with former BPL chief Rajeev Chandrasekhar promoted Jupiter Aviation to set up a freighter conversion facility, that will convert passenger aircraft into cargo planes.

The estimated investment for the facility, which will undertake domestic and international projects, would be $100 million.

State-run aerospace major Hindustan Aeronautics (HAL) is also firming up plans for full fledged conversion centre for Boeing aircraft as part of its maintenance, repair and overhaul (MRO) centre.

The plant would be developed on the lines of the Germany-based airplane converting firm EFW, a wholly owned subsidiary of EADS, which is the parent of Airbus Industrie.

The conversion of passenger aircraft into freighters, which costs between $7 million and $10 million, offers an economic alternative to the purchase of new freighter aircraft.

Sources said the details such as final investment, location, equity structure and business plan are yet to be finalised. Jupiter Aviation & Logistics CEO and managing director S Ravi Narayanan declined to comment adding "it is too premature to comment on this matter."

Jupiter Aviation is the aviation venture development subsidiary of Jupiter Capital, a venture development, management and investment company founded by Rajeev Chandrasekhar in July 2005.

The decision on starting this facility comes at a time when domestic airlines are either planning to convert their old passenger airplanes to freighters or float dedicated cargo airline subsidiaries.

For instance, Air-India is converting its two Airbus 310 passenger plane into cargo plane, while Indian Airlines is converting five of its Boeing planes.

Besides this, Air Deccan, Kingfisher Airlines, GoAir and IndiGo are planning to launch dedicated air cargo company. Airbus Industrie has projected that India alone will require 165 freighters by 2025.

Jupiter Aviation and EADS had earlier announced the signing of a strategic memorandum of understanding to collaborate in aviation ventures focusing on lifecycle support training.

The ventures would cover aircraft maintenance, repair and overhaul and knowledge/training for personnel of aviation industry.

The pact envisages Jupiter and EADS working with other key strategic international partners in India and abroad to develop aviation infrastructure in the country.