AI needs 60 more new planes to compete globally

New Delhi, Aug 6: Air India (AI) is putting together proposals which could result in orders for around 60 more aircraft, including the Airbus A380.

Its chairman Vasudevan Thulasidas says that about 60 new aircraft may be ordered to support replacement and growth requirements and to help the airline compete with privately owned Indian operators and foreign carriers that have been boosting services to India.

''Looking at the demand and passenger growth, the number of new orders could be about 60,'' he said. ''In the next two to three years, we should be replacing all the old aircraft with new ones.'' Civil aviation minister Praful Patel has said AI's fleet expansion studies will be looked at by the government in coming weeks after proposals are submitted. Airbus and Boeing aircraft will be considered, he said, including the ultra-large A380.

AI is being prepared for a merger with Indian (Airlines) and legal formalities are about to be completed.

Both government-owned airlines have been modernising and expanding their fleets, AI with firm orders for 68 737s, 777s and 787s from Boeing and Indian with firm orders for 43 A320 family aircraft from Airbus.

The enlarged airline's fleet will comprise around 110 aircraft at the time of the merger with deliveries of the remaining Airbus and Boeing aircraft on order due to be delivered through 2011. With economic growth and rising incomes, more Indians are flying. Around 60 million Indians travelled by air in 2006, and this is expected to increase to 100 million in 2010.

AI will have to face competition from private carriers like Jet Airways and foreign carriers like Lufthansa, Emirates and Singapore Airlines that are expanding in India.

The airline may sell shares next year to partly fund the purchase of new planes, the minister said. AI and Indian were planning to go for separate initial public offerings (IPOs) earlier, but the plan was delayed until the merger.

Air India will raise as much as 85 per cent of loans for the new planes from Export Import (Exim) Bank of the United States, according to the company's annual report for financial year ended March 31, 2006. The remainder will be raised as loans from commercial banks.

Air India had foreign currency loans of Rs 1,500 crore as of March 31, 2006. Purchase of new planes may help it improve profits which declined to Rs 14.94 crore in 2005-06 from Rs 96.36 crore.

UNI