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Business News/ Companies / News/  Delivery of two Dreamliners delayed over approval on funding

Delivery of two Dreamliners delayed over approval on funding

Air India official says RBI approval can come soon and the airline can start taking deliveries next week

Photo: Ramesh Pathania/Mint (Ramesh Pathania/Mint)Premium
Photo: Ramesh Pathania/Mint
(Ramesh Pathania/Mint)

Mumbai: State-run Air India Ltd’s plans to take delivery of two Boeing 787 Dreamliner aircraft could get delayed since the central bank is yet to clear funding for the same, a senior Air India executive told Mint on Saturday. Air India, which already has seven Dreamliners in its fleet, was scheduled to take delivery of its eighth plane by July end, and ninth by the second week of August.

“We are waiting for necessary approvals from the Reserve Bank of India (RBI) for the external commercial borrowing. RBI approval should come anytime from now and we would be able to take the delivery of Dreamliners next week," said the executive, requesting anonymity.

He added that Air India has raised around $200 million bridge loan from Deutsche Bank to make pre-delivery payments for these two planes and the airline needs RBI approval after which US Exim Bank would be able release the funds to Boeing Co. “The Federal Aviation Administration gave its approval on 16 August to fly the planes to India. The crew is already in Seattle to take the delivery," the executive added.

The Dreamliners are expected to turn around the fortunes of loss-making Air India. It bought Dreamliners worth $6 billion from Boeing under the leadership of then civil aviation minister Praful Patel, placing the orders in 2005. The debt-laden airline is itself in the midst of a government bailout with taxpayer funds worth at least $5 billion after reaching near bankruptcy in the past six years.

Asked whether the proposed plan to start the Delhi-Sydney-Melbourne route by 29 August will be affected by the delay, the Air India executive said the airline has seven planes to manage the Australia service.

According to consulting firm Centre for Asia Pacific Aviation, or Capa, Air India had achieved a cash surplus of approximately $75 million in the first quarter of the current financial year but, like other airlines, it is expected to report a large loss in the second quarter.

“International operations continue to drag down Air India. The induction of the Boeing 787 provides a window of opportunity to turnaround international performance as a result of the aircraft’s superior operating economics. However, the intermittent teething problems that have risen with the Dreamliner have been damaging for the airline and have cast some uncertainty over an aircraft that has otherwise performed well," said the Capa report that was released last week.

The report said the airline is opening new routes with the aircraft. Having launched a direct Delhi-Birmingham service on 1 August, Air India is planning to launch the Delhi-Sydney-Melbourne flight on 29 August and later to Rome and Milan.

On 31 July, Mint reported that the delivery of the eighth Dreamliner was stuck in the US over a snag or a fault was in the transformer rectifier unit which powers the cockpit display and other critical functions, including the brakes. Boeing Co’s Dreamliner planes were grounded for five months earlier this year following battery fires.

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Published: 17 Aug 2013, 07:27 PM IST
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