According to Reuters, Tata Group-led carrier Air India has signed deals with Airbus SE and Boeing Co for approximately 500 new planes worth more than $100 billion at list prices. This could be the single largest order ever placed by an airline, as Air India prepares to relaunch under the Tata Group with a more fuel-efficient fleet.
A brief about Air India has signed the world’s largest contract to purchase 500 new aircraft from Airbus and Boeing
The agreement, which will be split equally between Airbus and Boeing, was first reported in December and might be revealed next week, according to the article.
Air India will receive 250 Airbus aircraft, including 210 single-aisle A320neos and 40 widebody A350s. It intends to purchase 220 Boeing aircraft, including 190 737 MAX narrowbody jets, 20 787 wide-body jets, and ten 777Xs.
According to the article, the agreement was inked on February 10 by Airbus and Air India. The agreement was reached with Boeing on January 27, the day after the carrier celebrated its first anniversary of recovering possession of the former national carrier.
The Tata Group’s acquisition of Air India last year was one of the most high-profile privatisation agreements completed by the Centre under Prime Minister Narendra Modi. Tata Group submitted a winning proposal of Rs 18,000 crore as the airline’s enterprise value against a reserve price of Rs 12,906 crore. The deal included a payment of Rs 2,700 crore as well as the retention of a debt of Rs 15,300 crore. The deal was an audacious attempt to save the money-losing, debt-laden carrier that had been struggling for years.
Air India was reported last week to be borrowing Rs 18,000 crore from the State Bank of India (SBI) and the Bank of Baroda (BoB) to refinance its existing debt in the short term. The loans would be for a period of one year. Tata Group also intends to raise longer-term loans later this year.
These loans are a continuation of the financing facility obtained by the firm after taking over the airline. The corporation decided to keep the current borrowing arrangement in place for another year. They are likely to develop a new long-term strategy. The borrowing rate is greater than it was last year.