The Hindu Business Line : Air India board chooses Boeing <br>50 planes to cost Rs 30,000 cr; in-principle nod for IPO

THE Air-India board on Tuesday approved acquisition of 50 Boeing aircraft of three different types at an estimated cost of Rs 30,000 crore. The airline is buying new aircraft after a gap of nearly 10 years.

The board also accorded an in-principle approval to the company for an initial public offer of shares, subject to the approval of the Government.

The fleet acquisition plan, which is being sent to the Government for final approval, will take care of the state-owned carrier's fleet requirement up to 2012-13. The carrier at present has a fleet of 37 aircraft.

The board has decided to choose Boeing aircraft after detailed examination of the recommendations made by the in-house techno-economic committee that was appointed to examine the bids, an airline official said after the board meeting.

The airline will be buying eight B777-200 LR (more than 250 seats) medium capacity ultra long-range aircraft in three-class configuration, 15 B777-300 ER medium capacity long-range 350-seater aircrafts in three-class configuration and 27 B787 medium capacity long-range 250-seater aircrafts in two-class configuration. "The estimated cost is about Rs 30,000 crore, prior to negotiations with the manufacturers of air-frame and engines," the official said.

The official made it clear that Air-India had made no changes after the issue of the Request for Proposal. The board also took note of the fact that there are spillovers in the delivery schedules proposed by both the manufacturers with respect to one or more aircraft. "In any case, the final delivery schedule can be decided only after the necessary Government approvals have been obtained and orders are place," the official added.

Five members of the board, Mr V. Thulasidas, Chairman of Air-India, Mr P.K. Mishra, Additional Secretary to the Ministry of Civil Aviation, Mr Raghu Menon, Joint Secretary to the Ministry, Mr Sunil Arora, Chairman and Managing Director of Indian Airlines and Mr N. Vaghul, Chairman Emeritus, ICICI Bank, attended the meeting.

The Air-India Board, at its meeting held on November 24, 2004, had approved the floating of tenders for inviting offers for acquisition of 50 aircrafts. This was part of its plans to increase seat capacity by 12 per cent every year during the seven years.

The European aircraft manufacturer, Airbus Industrie, today expressed "disappointment" at the decision of Air India board to acquire 50 Boeing aircraft.

"We are disappointed at the decision of AI especially when we offered better solution for more competitiveness," the spokesman added.

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