The debt-ridden Air India is planning various strategies to raise money. One among them is sale and leaseback agreement (SLB pact), under which the airline will sell seven of its Boeing aircraft over the next 15 days to a lessor and take them back for lease for operations. SLB option will allow the airline to remove the planes and the debt associated with them from its balance sheet. The airline intends to take the aircraft for operating lease for 12 years with an option to extend the same for another three years.
The arrangement is expected to raise $856 million for Air India. The raised money will assist the carrier in meeting its immediate liquidity requirements. Besides, it will also help the airlines to repay the short-term loans taken for the acquisition of widebody aircraft.
Prices for Aircrafts
Air India has announced the tender for SLB on its website. The aircrafts kept for sale and leaseback include six Boeing 787 (Dreamliner) and one Boeing 777. Based on the age of these aircraft, Air India has set a reserve price of $105 million and $123 million for Boeing 787 and a reserve price of $157 million for the Boeing 777.
Recently, it put 70 residential and commercial buildings for sale to raise Rs. 700-800 crores. The annual target for Air India’s asset monetisation program is Rs. 500 crores.
The Union Minister for Civil Aviation Mr. Suresh Prabhu recently commented that a restructuring of business could save the airline from this unsustainable debt.
Air India has a debt burden of Rs 55,000 crore to clear besides the accumulated losses. The national carrier is receiving helps from the Government, which intends to find more funds for the airline.