The Hindu Business Line : Air India hopes to raise $400 m thru sale and lease back offers

New Delhi, Jan. 8 Air India hopes to raise more than $400 million from the sale-and-lease back of 10 aircraft in its fleet. The airline has sought sale-and-lease back offers from lessors and bankers for four Boeing 747-400 and six Airbus A-320 aircraft.

This is the first time that the National Aviation Company of India Ltd, the entity created through the merger of Air India and Indian, is seeking to raise funds through its assets. NACIL plans to sell the aircraft to the lessor or banker and immediately lease it back under an operating lease for up to seven years. The airline has set a reserve price of $65 million for three Boeing 747 which were made in 1993 and $70 million for the single Boeing 747-400 which was inducted in 1994. In addition, it is seeking $25 million per aircraft for the Airbus A-320 aircraft.

Last year, Air India had raised more than Rs 350 crore from the sale-and-lease back of five Airbus A-310 aircraft while Indian had raised more than Rs 500 crore after entering into a similar arrangement for seven Airbus A-320 aircraft.

Official sources told Business Line that the funds raised through the sale-and-lease back route would be used not only to meet long-term working capital requirements but also meet the pre-delivery payments for new aircraft being inducted. NACIL has ordered more than 110 aircraft from both Airbus and Boeing at an estimated cost of more than Rs 35,000 crore. The sale-and-lease back arrangement is considered as a cheaper alternative for raising funds.