The Hindu Business Line : Cabinet decision to benefit airlines opting for Exim financing

New Delhi, Nov. 27 The Cabinet decision to accede to the Cape Town Convention could see not only Air India save as much Rs 264 crore on the 68 Boeing aircraft deal but also benefit other Indian airlines going for Exim financing to cut their aircraft acquisition costs.

The Cape Town Convention offers a host of benefits to lessors and those into the business of mortgage of aircraft, including providing additional security for repossession of aircraft in case of default especially when payment obligations have not been met.

Official sources told Business Line that after India signs the Convention and the document is filed with a United Nations agency in Rome, the US Exim would be in a position to lower its exposure fee on the Boeing aircraft being purchased by the Air India from three per cent to two per cent. “The total exposure for the 68 aircraft is to the tune of $6 billion. The savings due to the one per cent decrease would work out to around $66 million or about Rs 264 crore,” sources said.

AI Express reports profit

Air India Express, the low cost subsidiary of Air India, has reported a net profit of Rs 6.55 crore for the fiscal year 2006-07. The accounts were approved by the Board of Air India Charters Ltd last Friday in Mumbai. Despite fuel costs going up by Rs 108.49 crore to Rs 190.22 crore, the airline’s operating revenues increased to Rs 706.82 crore from Rs 430.58 crore earlier.