Air India signs biggest deal to buy 500 new aircraft from Airbus, Boeing

In a historic order, Tata Group-led carrier Air India has signed agreements with Airbus SE and Boeing Co for about 500 new planes worth more than $100 billion at list prices, a Reuters report said. This could be the single largest order by any airline as Air India prepares to revamp itself under the Tata Group with a fuel-efficient fleet.

The deal, split equally between France's Airbus and US’s Boeing, was first reported in December and could finally be announced next week, the report said.

Air India will get 250 Airbus planes -- 210 single-aisle A320neos and 40 widebody A350s. It plans to get 220 Boeing aircraft, -- 190 of its 737 MAX narrowbody jets, 20 787 wide-bodies and 10 777Xs.

As per the report, Airbus and Air India signed the agreement on February 10. The carrier sealed the deal with Boeing on January 27, the day it celebrated its first anniversary of regaining ownership of the former national carrier.

Tata Group’s takeover of Air India last year is one of the most high-profile privatisation deals of the Centre under PM Narendra Modi. Tata Group tabled a winning bid of Rs 18,000 crore as the enterprise value of the airline against a reserve price of Rs 12,906 crore. The bid comprised a payment of Rs 2,700 crore and retaining a debt of Rs 15,300 crore. The transaction was an ambitious attempt to revive the money-losing, debt-laden carrier that was struggling for years.

Last week, it was reported that Air India will borrow Rs 18,000 crore from the State Bank of India (SBI) and Bank of Baroda (BoB) to refinance its existing debt over the short term. The loans would be in the form of one-year loans. Tata Group plans to raise longer tenure loans later this year too.

These loans are a continuation of the debt facility that the company availed after it took over the airline. The company decided to continue with the current borrowing arrangement for another year. They are likely to make another long-term strategy. The loans are at a higher rate than last year.