CAG takes dim view of Air India's aircraft acquisition

Ashwini Phadnis New Delhi | Updated on March 08, 2011 Published on January 27, 2011

The Comptroller and Auditor-General (CAG) is believed to have come down heavily on Air India on the 111 planes it has bought for over Rs 40,000 crore starting 2006.

The cost of each of the 43 Airbus A-320 family of aircraft and 68 Boeing aircraft ordered by Air India ranges from $37.34 million to $143 million.

The CAG is also said to have questioned why the Maintenance, Repair and Overhaul (MRO) facility that was to come up as part of the Indian order has not come up.

The observations are said to be contained in an interim report on Air India. Being a State-owned enterprise, the finances of Air India are regularly audited by the CAG.

As part of the offset obligation for Indian's Rs 9,890-crore 43-aircraft acquisition proposal, the European aircraft manufacturer was to set up an MRO. While Air India has received all the 43 aircraft ordered, the MRO is yet to come up.

As regards the Boeing deal, the CAG is said to not only have questioned why the number of aircraft ordered by the airline increased to 50 when the Government was earlier planning to take 35 on firm orders and have the option of taking another 15 at a later date, but also sought to understand why a bridge loan was taken to finance the deal.

The report, which is to be tabled in Parliament soon, is also said to have raised questions on the merger process between Air India and Indian and talked about the poor financial performance of the company.

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Published on January 27, 2011
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