Air India Ltd. is in talks with banks to help fund its recently announced record aircraft order, benefiting from the support of its new owner, Tata Sons Ltd., the carrier’s chief executive officer said.
“We have the backing of Tata Sons, so there is financing available for these aircraft,” CEO Campbell Wilson said in an interview with Bloomberg News on the sidelines of the CAPA India Aviation Summit in New Delhi on Monday. “We have already made some down payments for these aircraft from our internal funds.”
Air India has ordered 470 aircraft from both Boeing Co. and Airbus SE, with deliveries beginning at the end of this year. For such large purchases, discounts are common.
Wilson said last month that the formerly state-run carrier will fund the order with cash, shareholder equity, and aircraft sales and leasebacks. Air India hopes to compete with Emirates and Qatar Airways, which dominate lucrative routes from India to the United States and Europe via their hubs in Doha and Dubai, respectively.
Wilson didn’t say which banks Air India is talking to.
India has returned to pre-Covid levels of air traffic faster than most other countries, owing to a strong domestic market and a growing middle class. According to the Sydney-based CAPA Centre for Aviation, domestic air traffic is expected to increase by 20% to 160 million passengers in the year through March 2024, and the country’s carriers may operate a fleet of 1,400 jets by 2030.
To meet rising demand, India plans to invest approximately 980 billion rupees ($12 billion) in airports over the next two years, including new terminals and renovations of existing facilities. A lot of that growth may come from smaller cities where air travel penetration is low.
“India over the last few decades has been punching below its weight,” said Subhas Menon, director general of the Association of Asia Pacific Airlines. “The government is doing what is natural, to build up potential as an aviation hub.”
Air India is planning to merge with Vistara, a joint venture of Singapore Airlines Ltd. and Tata Group, to form a single full-service carrier. The airline is investing $400 million in upgrading its widebody planes, including new seats and in-flight entertainment systems.
Tata, India’s largest conglomerate, purchased Air India from the government in 2021 for $2.4 billion. The high-profile privatization under Prime Minister Narendra Modi ended decades of attempts to sell the money-losing, debt-laden carrier, which had been kept alive on years of taxpayer bailouts.
Also Read: Court Extends Manish Sisodia’s Judicial Custody By 14 Days