With the probe into incidents involving B-787 Dreamliners likely to take some more time to be wrapped up, Air India has decided to put up for sale and leaseback all six newly-acquired Dreamliners.
It has invited bids from prospective lessors by February first week. The six state-of-the-art Dreamliners have been grounded since January 17 and are likely to remain in that state for another month. In all, 50 Dreamliners have been grounded all over the globe following a directive from the U.S. Federal Aviation Administration (FAA) after a fire risk reportedly caused by a battery problem.
Official sources said the national carrier had gone ahead with this plan to cut losses and had the backing of the government as part of its turnaround and financial restructuring plans.
Sale-leaseback is an arrangement in which an owner sells an asset to a leasing firm and, at the same time, leases it (as a lessee) on a long-term basis to retain exclusive possession and use. This frees capital tied up in a fixed asset, while the lender obtains a guaranteed lease. Air India can claim tax deductions as the asset is no longer owned but leased, which will help it in streamlining its operations and cut costs.
Air India has invited quotations from lessors on or before February 5 on a Request for Proposal (RFP), which said it would sell the aircraft to the lessor and immediately leaseback them under an operating lease for 12 years, with an option to extend. Though the airline is yet to get the seventh plane, scheduled for delivery this month, it has gone ahead and announced in the RFP the sale and leaseback of seven planes. However, the sources indicated that the delivery of the seventh plane could stand deferred in view of the ongoing investigations into the incidents involving the Dreamliner.
Air India plans to sell all its 27 Dreamliner aircraft to a lessor and lease them back to operate by paying monthly rentals, a common fund-raising practice among airlines. Air India has adopted this practice in the past also.
