Home >companies >news >Etihad Airways buys 5 Boeing 777-200 planes from Air India

Mumbai: Etihad Airways PJSC, the national airline of the United Arab Emirates (UAE), has bought five Boeing 777-200 LR (long range) planes from India’s national flag airline Air India Ltd for an undisclosed amount.

As a part of its turnaround plan, debt-laden Air India put eight of its wide-body Boeing 777-200 LR planes on the block.

An Air India executive, requesting anonymity, confirmed the state-run airline sold five of its 777-200s, popularly known as Worldliners, to Etihad Airways. The sale is “subject to Air India’s board and government approvals," he said.

Mint could not immediately contact Etihad Airways, which in April struck a 5,600-crore deal to buy a 24% stake in Jet Airways (India) Ltd.

Etihad Airways will deploy the planes it’s buying from Air India to launch direct flights to Los Angeles, California, a person aware to the plan said. On 8 October, Etihad announced the launch of direct flights to Los Angeles from its hub Abu Dhabi from 1 June next year.

The sale of the five plans is likely to fetch Air India $500 million but executives declined to name specific numbers.

Air India has a total debt of 40,000 crore and is in the midst of a 30,000 crore government bailout after reaching near bankruptcy in the past six years. The airline will get the funds only after meeting certain turnaround targets.

In March, Air India had decided to sell five out of its eight Boeing 777-200 LR aircraft due to a tepid market, steep increase in fuel prices and poor yields on non-stop routes.

“Air India is planning to sell its B777-200 LR aircraft. Air India had inducted eight such aircraft between 2007 and 2010," K.C. Venugopal, junior aviation minister, said in a written reply in Lok Sabha in March.

Last month, Air India executives said these cost-cutting and revenue-generating measures are expected to help the airline turning to Ebitda (earnings before interest, tax, depreciation and amortization) positive at 1,040 crore in the current fiscal year.

The national flag carrier is expected to post a net loss of 3,900 crore in the current fiscal year, 23.52% less from the net loss of 5,100 crore in the previous fiscal year. Air India had posted 7,100 crore net loss in 2011-12.

On 3 October, the cabinet cleared the 2,058 crore deal by Etihad Airways to buy a stake in Jet Airways, the first such investment since the government eased ownership rules for foreign airlines.

In April, Etihad Airways had agreed to buy a 24% stake in Jet Airways after the government relaxed rules in September 2012 to allow foreign airlines to own as much as 49% of local carriers. The Foreign Investment Promotion Board, or FIPB, on 29 July approved the transaction with certain riders.

The investment will allow Jet to expand its fleet and pare debt after posting a combined loss of 2,806 crore in the past seven fiscal years because of high fuel costs and competition from low-fare airlines.

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