The Hindu Business Line : Indian Airlines gets Cabinet nod for Airbus acquisition

THE almost four-year-long wait of Indian Airlines to acquire 43 Airbus aircraft is finally coming to an end. The Cabinet Committee on Economic Affairs (CCEA) on Thursday cleared the airline's proposal to acquire the aircraft at an estimated price of Rs 9,890 crore.

Briefing newspersons after the meeting, the Finance Minister, Mr P. Chidambaram, said "the CCEA has approved the decision of the empowered-Group of Ministers (e-GoM) to buy 43 Airbus aircraft for IA."

The airline plans to acquire 19 A-319, 20 A-321 and four A-320 aircraft. Almost 70 per cent of the aircraft that the airline will be acquiring will be for replacement of the existing fleet while the rest will take care of the growth in the market.

The e-GoM, which was chaired by Mr Chidambaram, was set up by the Prime Minister to make one last attempt to negotiate a further reduction in the cost of acquisition from the European aircraft manufacturer.

In March 2002, the airline board had cleared the proposal to acquire the aircraft at a cost of Rs 10,089 crore. However, the cost of the acquisition had escalated to Rs 10,237 crore before the e-GoM was successful in getting a direct concession of Rs 349 crore ($75 million) from Airbus earlier this month.

Furthermore, after negotiations with the e-GoM the engine manufacturer, CFM and Airbus agreed to increase the counter trade and offset commitment from the existing 30 per cent to 40 per cent.

Besides, Airbus agreed to set up not only an ultra-modern training centre for pilots with an investment of $75 million but also a spare-parts, warehouse here to cater to the requirements of not only IA but other airlines also.

IA will, however, have to wait another few days till the formal communication about the CCEA decision is received from the Ministry of Civil Aviation before it enters into a memorandum of understanding with Airbus for delivery of the aircraft. The airline is likely to get the first of the aircraft by the middle of next year, sources said.

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