Funds for 15 Air India Dreamliners unsure

NEW DELHI: Air India's woes may have just compounded with uncertainty over funding of its purchase of Boeing's Dreamliners.

"America's Delta Airlines has challenged US Export-Import (Exim) Bank's decision to extend a soft loan to AI for buying the Dreamliners in the US Supreme Court. Their plea is that helping AI acquire these planes harms the commercial interests of US carriers," said a source.

While Delta has moved court to stop the $3.4-billion loan guarantee, Air India management has requested the Exim Bank not to stop funding the Dreamliner purchase. The Exim bank has so far funded purchase of 12 planes and now a decision has to be taken on the remaining 15 Dreamliners on AI's order book. AI is going to take delivery of the 17th Dreamliner this month.

A team of top AI officials met Exim Bank brass in the US earlier this week, requesting them to continue with the funding. "Exim Bank loan comes at a much lower rate than what we would have to pay for raising the funds from other commercial institutions. The promise of low-cost funding was among the main reasons for India's mega order to Boeing in 2005-end by UPA-I," said a source. India has given sovereign guarantee for this loan, thus justifying the reasonable rate of interest for this almost risk-free loan.




The erstwhile AI (international) had ordered 50 wide-body Boeings — 23 B-777s and 27 B-787s — for Rs 33,197 crore, along with an additional 18 narrow body B-737 for AI Express for Rs 4,952 crore.

The Dreamliners have been a source of constant troubles for all airlines. The glitches have meant its on-time performance remains below what is expected from a mint fresh aircraft. "AI is suffering from being a government organization where no decision can be taken. We bought these planes way back in 2005 at rates prevalent then. Had a private airline been in our place, it would have sold these planes at their much higher current price and made a killing. But we can't do that," said a senior pilot. The airline has started adopting the sale-and-lease-back model for Dreamliners.