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Panel approves AI's acquisition of 68 Boeing aircraft for Rs 38,000 cr Govt secures discount of Rs 1,000 cr

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The Minister for Civil Aviation, Mr Praful Patel, briefing newspersons after a meeting of the empowered Group of Ministers (eGoM) in the Capital on Saturday. Also seen in the picture is the Air India Chairman and Managing Director, Mr V. Thulasidas, and the Joint Secretary in the Ministry of Civil Aviation, Mr R.K. Singh (centre). - Kamal Narang
The Minister for Civil Aviation, Mr Praful Patel, briefing newspersons after a meeting of the empowered Group of Ministers (eGoM) in the Capital on Saturday. Also seen in the picture is the Air India Chairman and Managing Director, Mr V. Thulasidas, and the Joint Secretary in the Ministry of Civil Aviation, Mr R.K. Singh (centre). - Kamal Narang

Our Bureau

New Delhi, Dec. 24

THE empowered Group of Ministers (e-GoM) on Saturday approved Air India's proposal for purchasing 68 Boeing aircraft at an estimated cost of Rs 35,000 crore.

Briefing newspersons after an almost five-hour long meeting between the e-GoM and representatives of Boeing and GE, the Minister for Civil Aviation, Mr Praful Patel, said that the Government was able to secure a monetary discount of more than Rs 1,000 crore today on what AI would pay for acquiring the aircraft. The acquisition was earlier estimated to cost Rs 37,900 crore.

In addition, Boeing and GE have committed investments of $205 million including putting up four training simulators at a total cost of $75 million, setting up a maintenance, repair and overhauling facility for Boeing aircraft at a cost of $100 million and putting in $10 million for training and other civil aviation requirements.

The e-GoM also secured agreement on `offsets' at 30 per cent of the value of the aircraft that could see the manufacturer pick up goods and services from India worth at least Rs 8,500 crore. The Minister said that the precise calculation sheet of how much monetary concession AI will get is being worked out.

The e-GoM is headed by the Finance Minister, Mr P. Chidambaram, and includes the Ministers for Law and Justice, Civil Aviation and Planning and Programme Implementation. The minutes of today's meeting would now be sent to the Prime Minister, Dr Manmohan Singh, for final approval.

The Rs 1,000-crore discount that was secured today is in addition to the discount of between Rs 850 crore and Rs 900 crore that AI was able to negotiate earlier during its meeting with officials of Boeing and GE.

The airline has also decided to exercise the option of converting 15 aircraft on order to firm deliveries. "The delivery of the aircraft will begin in November next year and will progress till 2012. However, we have asked Boeing to see that all the aircraft are delivered by 2011 itself," Mr Patel said.

The airline board had in April this year cleared a proposal to purchase 50 Boeing aircraft including 27 Boeing 787, 8 B 777-200 Long Range and 15 B777-300 Extended Range aircraft. Besides, another 18 Boeing 737-800 aircraft are being purchased for the airlines' 100 per cent subsidiary, Air India Express.

"This is the largest deal and is substantial. The deal is worth $10 billion," the Senior Vice-President, Sales, Boeing, Dr Dinesh Keskar, said.

(This article was published in the Business Line print edition dated December 25, 2005)
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