Faced with a slump in the aviation sector and mounting government pressure to restructure, cash-strapped national carrier Air India is mulling cancelling delivery of six Boeing-777 long-haul aircraft.
Air India Chairman and Managing Director Arvind Jadhav and Boeing India President Dinesh Keskar held a meeting in Mumbai today at the Air India office to discuss the matter.
“Air India is in dialogue with Boeing for cancellation of six B-777 aircraft deliveries in 2010-11 and 2011-12 in view of the current global aviation scenario,” an Air India spokesperson told PTI.
The national carrier, which is facing a severe cash crunch, had ordered 111 aircraft, including 68 from Boeing, at a total cost of over Rs 50,000 crore to augment its fleet. The fleet renewal plan, including scheduled deliveries of airplanes, is currently being reviewed by the carrier. As of now, it has 46 aircraft on lease, including 17 on sale-and-lease back arrangement.
The Air India board, in its recent meeting, asked the airline management to cancel the delivery of six aircraft. But the letters have not been issued, an airline official said.
The airline, which is estimated to have suffered a loss of Rs 7,200 crore in 2008-09, has been overburdened by its working capital borrowings worth Rs 17,000 crore. It has overdrafts from 15 banks. The carrier wants government to underwrite at least Rs 10,000 crore of this burden. The national carrier had sought government’s help and asked for equity infusion of about Rs 2,500 crore and a soft loan of Rs 10,000 crore for five years.
However, the government said any financial help would be extended only if the carrier undertakes a restructuring exercise and submits plans to return to profitability. Last week, the government asked the finance ministry to examine the extent of financial assistance to be given to the airline and the petroleum ministry to extend the credit limit on jet fuel for at least three months.
India to be the first buyer of ‘Poseidon’
Meanwhile, American aviation giant Boeing today rolled out its first ‘P-8A Poseidon’, claiming it to be the world’s most advanced multi-mission maritime patrol and reconnaissance aircraft, with the company saying India would be its first buyer country.
India has ordered eight P-8Is, a derivative of the American version, the first of which Boeing will deliver within 48 months of the contract being signed. The other seven aircraft would be delivered by 2015, filling a wide gap in India’s maritime reconnaissance capability, hit by crashes of its Russian-built aircraft.
