By Santanu Choudhury
NEW DELHI--Air India Ltd. has offered to sell its three
remaining Boeing Co. (BA) 777-200 longer-range jetliners, and also
sought a bridge loan of up to $500 million to take delivery of four
787-800 Dreamliner jets from Boeing.
The move to end its fleet of the 777-200LR planes is part of the
loss-making airline's strategy to turn profitable through various
steps, including renting out office space and using the more
fuel-efficient 787s.
The Indian flag carrier had sold the first five of its eight
777-200 jetliners last October to Abu Dhabi-based Etihad Airways
for about 21 billion rupees ($350 million). Those five planes were
delivered to Air India in 2007 and 2008.
Air India didn't give the potential value of the three planes
now put up for sale. But a company executive told The Wall Street
Journal Monday that they would command a higher valuation than in
the previous sale since these planes were delivered in 2009. A
brand-new 777-200LR has a list price of US$296 million.
"The 777-200 LR is not viable for Air India's operations," the
executive said. "We had initially intended to have ultra-long-range
flights to places like Seattle, San Francisco and Los Angeles, but
those plans were cancelled due to factors like higher fuel prices
and weak demand."
A 777-200LR, which Boeing calls the Worldliner, can fly up to
17,395 kilometers and is the longest-range passenger jet ever
built, according to the aircraft manufacturer.
However, Air India's fleet of 777-200LRs can carry only up to
238 passengers. The executive said the airline's 777-300ERs can
carry up to 342 passengers, making them a more viable option.
On shorter routes as well, the 777-200LRs are less efficient to
operate. The airline is replacing them with the more modern and
less fuel thirsty Boeing 787. It ordered 27 of the 787s and has so
far received 13.
Separately, Air India has invited bids from banks and financial
institutions for the bridge loan to take delivery of another four
787s. The planes are scheduled to be delivered starting May through
November.
A bridge loan is typically used to meet payment commitments
until longer-term financing is arranged. Air India plans to repay
the loan by selling the four planes to leasing companies. It will
then lease back the planes on monthly rentals.
Write to Santanu Choudhury at santanu.choudhury@wsj.com
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