Air India has partnered with Deutsche Bank and UK’s Investec Bank for a bridge loan of up to $500 million to finance purchase of five Dreamliners (Boeing 787s).
The airline has already taken delivery of seven Dreamliners. The delivery of another five aircraft will take place by October, a senior airline official told Business Line .
“The bridge loan will be refinanced before March 2014 though a sale and lease back agreement. With this, the financing and sale and lease back of the first 12 Dreamliners have been completed,” the official said. A bridge loan is interim financing (short-term loan) for an individual or business until permanent or the next stage of financing can be obtained.
Out of the 12 aircraft, seven Dreamliners are in the process of being given for sale and lease back. “Four Dreamliners will be given for sale and lease back to Investec Bank and three to Deutsche Bank,” the official added.
The airline had placed orders for 68 aircraft from Boeing in 2006, which include 27 Dreamliners.
Last month, the national carrier had invited bids from banks and financial institutions to arrange bridge finance of up to $500 million to pay for five Dreamliners.
The airline has raised the fund for 6-12 month period.
Air India’s turnaround plans is greatly dependent on the success of the Dreamliner as the fuel-guzzling Boeing 777-200 aircraft used by the national carrier at present is denting the company’s finances. The airline industry is struggling with both high oil prices and a depreciating rupee.
The Boeing 787 Dreamliner is a long-range, twin-engine jet airliner and is said to be the company’s most fuel-efficient airliner.