Friday, June 2, 2023

For the largest aircraft purchase ever, Air India is not worried about finding the money.

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With the support of its new owner, Tata Sons Ltd., Air India Ltd.’s CEO has been in discussions with banks about funding the airline’s recently announced record aircraft order. We have the backing of Tata Sons, so there is funding available for these aircraft,” CEO Campbell Wilson told Bloomberg News in an interview on the sidelines of the CAPA India Aviation Conference in New Delhi. The initial payments for these planes were made with company funds. On March 20th, Campbell Wilson was in New Delhi.

In total, Air India has placed an order with Boeing Co. and Airbus SE for 470 planes, with delivery set to begin by the year’s end. Price reductions are frequent for orders of this magnitude. Last month, Wilson stated that the formerly state-run airline would utilise cash on hand, shareholder equity, and the sale and leaseback of aircraft to help pay for the purchase. Air India plans to compete with Emirates and Qatar Airlines, which now control the most lucrative routes from India to the United States and Europe via their respective hubs in Doha and Dubai.

Wilson did not specify which banks Air India has been in contact with. Due to its robust domestic market and expanding middle class, India has recovered from the effects of the Covid meteor shower more quickly than any other country. According to Sydney’s CAPA Centre for Aviation, domestic air traffic would increase by 20% to 160 million passengers in the year through March 2024, and the country’s airlines may operate a fleet of 1,400 planes by 2030. New terminals and upgrades to existing airports are part of India’s $12 billion plan to spend over the next two years to keep up with growing passenger numbers. One possible source of this expansion is in less-populated areas, where air travel is less common.

For decades, “India has been punching below its weight,” Subhas Menon, director general of the Association of Asia Pacific Airlines, stated. The government is doing what it should be doing to increase its attractiveness as a hub for air travel. In order to create a single, comprehensive airline, Air India is merging with Vistara, a partnership between Singapore Airlines Ltd. and the Tata Group. To improve customer comfort and in-flight entertainment, the airline is investing $400 million to retrofit all of its wide-body aircraft. In 2021, Tata paid the Indian government $2.4 billion to acquire Air India. In a high-profile privatisation under Prime Minister Narendra Modi, the loss-making, indebted airline that had been kept afloat by years of taxpayer subsidies was finally sold.

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