Indian Airlines (IA) today cleared the pre-public investment board (PIB) stage for its aircraft acquisition plan.
The domestic carrier has, however, been asked to re-work the cost due to an appreciation of the rupee to the US dollar.
No objection was raised about the configuration or the number of aircraft and the proposal has been cleared in toto.
Sources said that the Planning Commission question about why the acquisition option was being adopted instead of a leasing model had been suitably answered by the airline representatives.
The proposal will now move to the PIB for clearance after IA has re-worked the cost. Officials said that the civil aviation ministry could send the IA proposal individually for consideration of the cabinet committee on economic affairs.
Earlier the ministry had been asked to club the fleet acquisition proposals of IA and Air-India (A-I).
Sources said that as of now no decision has been taken on the financing pattern for the acquisition. Though IA has suggested that 90 per cent of the amount should be met through external borrowings.
The earlier Pre-PIB meeting, held in April 25, fell through as there was no representation from the Planning Commission.
The civil aviation ministry had then sought an in principle approval for the acquisition plan, which was granted only in May.
Considering that the finance ministry had raised objections to the whole project citing IA's negative net worth, this clearance gains significance.
Earlier the finance ministry's objection to the acquisition was on the basis that IA was on the disinvestment roster.
The problem was solved with the cabinet committee on disinvestment removing both IA and A-I from the disinvestment list.
The Indian Airlines board of directors in March 2002 had approved the acquisition of 43 aircraft of the Airbus A-320, A-319 and A-321 models. Airline executives say that a fleet expansion is a must for the carrier to contain the drop in marketshare.
Acquisition process
