A-I raises Rs 2,250 cr to acquire 68 Boeings

National flag carrier Air India has raised $500 million (nearly Rs 2,250 crore) from ABN AMRO-led banking consortium to make pre-delivery payment (PDP) to US-based aircraft manufacturer Boeing Company.

Air India had signed an agreement with Boeing in December 2005 for acquiring 68 aircraft, including 18 for its low-cost subsidiary Air India Charters. The total acquisition cost is valued over $7.2 billion.

This $500 million would be used to make PDP for acquiring Boeing 737-800 and Boeing 777 aircraft which would be delivered by May 2008. The other members of the ABN AMRO banking consortium include the State Bank of India and ICICI Bank.

Asked about the interest rates, a senior Air India executive declined to comment, adding, "the rates are reasonable above Libor at aggressive rates". Normally, airlines pay up to 15 per cent of the price of the aircraft in the form of the PDP, prior to the delivery of aircraft, while the remaining 85 per cent is met through exim bank of respective countries.

Air India has received five Boeing 737-800 this month from Boeing. Air India plans to use these aircraft in new routes as well for existing routes.

The Export-Import Bank of the US (Exim Bank) has cleared Air India's financial support for $6.2 billion. It has already issued final commitment letter for $1.4 billion in respect of 17 aircraft to be delivered to Air India by December 2007 and a preliminary commitment in respect of the remaining 51 aircraft to be delivered by December 2011.