The Hindu Business Line : IA signs LI for purchase of 43 Airbus aircraft

The agreement was signed here by the airline's Chairman and Managing Director, Ms Sushma Chawla, and the Senior Vice-President (Marketing), Airbus, Dr Kiran Rao. Although the airline will soon be paying a small `commitment fee' to the aircraft manufacturer, sources refused to divulge details of the quantum of payment to be made. The commitment fee will, however, be refunded if either of the two parties decides to call off the agreement.

In the next two months, the airline will firm up a purchase agreement with Airbus that will specify payment schedules and delivery dates. IA is to take delivery of the first purchased aircraft — an Airbus A-321 — in October next year. "The delivery of the other aircraft will be intermittent for a short period of time. But from early 2007 Indian will receive one aircraft a month. The delivery of the entire 43 aircraft will be completed by March 2010," official sources said.

In September the Government cleared the airline's $2-billion acquisition proposal. The Government has already agreed to provide a sovereign guarantee for the aircraft purchase.

Kotak Mahindra is IPO advisor

THE Government has appointed Kotak Mahindra as advisors for the proposed initial public offering (IPO) of Indian Airlines.

Confirming the development, official sources said the size of the issue and when it should open would be decided by the advisors soon. A portion of the funds raised through the IPO could be utilised by the airline to fund its 43-Airbus aircraft acquisition proposal. The acquisition is valued at more than $2 billion.

The Government has already given permission to both Air India and IA to tap the market. Although officials were tight-lipped about the amount of equity to be divested, sources indicated that between 15-20 per cent of the equity of IA could be offloaded.

IA is likely to offer a portion of its IPO to its employees.