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A-I defers decision to buy new planes

April 12, 2003 17:31 IST

The board of state-run international flag carrier Air-India Ltd on Saturday deferred a key multi-billion-dollar plan to buy up to 17 planes from either Boeing or Airbus, a spokesman said.

The board was to decide between rival bids by Boeing Co and Airbus for the order, the airline's biggest-ever fleet expansion.

"The board has not taken any decision today," Jitender Bhargava told Reuters on Saturday. "It will again meet in the next seven to 10 days to take a decision."

The deal is crucial for both Boeing and Airbus, which are battling to win new orders amidst a global downturn in the aviation industry. Boeing had estimated the order could be worth $1.9 billion.

Boeing was seeking to sell the extended range version of its 777-200 which is pitted against the Airbus A340-300.

The medium-capacity long-range planes can seat more than 250 people and fly non-stop for more than 10 hours from India to such destinations as the United States and western Europe.

Any decision by Air-India's board will still need government approval before the airline can place the order. Air-India plans to place firm orders for 10 planes with an option to buy another seven. It now has a fleet of 30 planes.

The expansion will boost the airline's market share to nearly 25 per cent from 18.4 per cent and allow it to phase out six older Boeing 747-200 and 300s. The planes are expected to be inducted over five years starting from the fiscal year beginning in April.

India is seen as a lucrative market for both Boeing and Airbus as air travel demand in the country is expected to expand at more than five percent annually over the next 20 years.

Last March, state-run domestic carrier Indian Airlines Ltd opted to buy 43 planes from Airbus for $2.1 billion. That deal, for a mix of A319, A320 and A321 planes, is still awaiting government approval.

Civil Aviation Minister Shahnawaz Hussain has said the government would approve the carriers' plans for new planes after it decides whether to sell part of its stakes in the airlines.

The finance ministry has been reluctant to approve the purchase of new planes by the airlines while deciding whether to sell its stakes.

Air-India, which eked out its first annual profit in seven years in 2001-02, also plans to buy 18 small-capacity, short-range planes for which it is evaluating the Boeing 737-900 and the Airbus A321.

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Number of User Comments: 2

Sub: Indeciveness

As usual the govt is indecivisive and is not taking a prompt decision=either say yes or no to the deal.

Posted by Gopalan Prasad

Sub: why not have our own planes

i share the view's of president abdul kalam azad, why buy from other people when we have technology to make it...1.9B dollars is a lot ...

Posted by Asif


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