The Hindu Business Line : Banks queue up for loan to IA

Eight banks and financial institutions are in the race to provide loan assistance to Indian Airlines for its pre-delivery advance payments (PDP) towards the acquisition of 43 aircraft from Airbus Industrie.

Official sources told Business Line that among the banks that have responded to the airlines request include State Bank of India, ICICI and Standard Chartered Bank.

The airline is seeking close to $145 million to make the PDP payment for purchase of 19 Airbus A-319, 20-A-321 and four A-320 aircraft. The entire deal is valued at Rs 9,890 crore .

Generally airlines have to make a small PDP payment before the aircraft manufacturers block off their production line of an aircraft for a particular airline. The purchase agreements with Airbus and the engine manufacturer, CFM has been finalised and the aircraft are to be delivered from October this year till March 2010.

"We will take a final decision on which institution the loan should be taken shortly," sources said. The airline is likely to seek the fund from one bank rather than look at a consortium of banks as the quantum of funds required is small.

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