EXIM Bank clears AI's fleet acquisition proposal

New Delhi, Oct 9: The Export Import (EXIM) Bank has cleared Air India's loan proposal for acquisition of 68 Boeing aircraft.

AI had signed an agreement Boeing Commercial Airplanes in December 2005 for acquisition of 68 aircraft, including 18 for its subsidiary company Air India Charters Limited.

The clearance provides for a final commitment in respect of 17 aircraft and engines to be delivered from November 2006 upto December 2007 which includes 10 aircraft for AI Express and seven aircraft for AI and a preliminary commitment in respect of the remaining 51 aircraft to be delivered between January 2008 upto February 2012.

Exim Bank will guarantee the loan upto 85 per cent of the aircraft cost and the balance 15 per cent will be funded through commercial borrowings. AI had invited applications to finance the delivery payments and the final commitments in respect of 17 aircraft and ABN Amro has been mandated to lead finance the funding supported by EXIM Bank.

The balance 15 per cent will be funded by State Bank of India and ICICI Bank. The EXIM portion, which will include airframes and engines, will be amortised over a period of 12 years and the commercial portion in a period of five years from the date of drawal of loans.

The approval follows meetings by the AI team led by its chairman and managing director V Thulasidas with the top brass of EXIM Bank in early August.

The government will in turn provide a guarantee for 85 per cent of the loan guaranteed by the EXIM Bank.

UNI