Air India floats tender to sell Boeing-737 freighters

In a major bid to shore up its falling revenues, cash-strapped Air India has floated a global tender for the sale of six Boeing 737 freighters, virtually bringing the curtains down on its plan to launch a dedicated cargo service.

The state-owned airline has already offered to lease out five of its eight Boeing 777-200 planes for 8-10 years and decided to go for sale and leaseback of the first seven Boeing 787 Dreamliners it is expected to receive till June this year.

The six 30-year old Boeing 737-200 freighters, which are up for sale on 'as is, where is' basis, belong to the erstwhile Indian Airlines. Three of these planes were earlier operating postal charters for the India Post.

These passenger planes were converted into cargo carriers in 2007 when the airline had planned to launch a pan-India cargo service using Nagpur as the hub.

Air India later shelved the plan due to financial crisis and was considering selling off these planes since early 2010. It had earlier sold off four Airbus A-310 freighters.

Besides these freighters, the global tender also includes the intention to sell eight aircraft engines, four auxiliary power units, aircraft seats and spares.

The Technical Bids, which would be based on the highest bid (H1), would be opened on February eight, airline sources said today.

The global tender was floated ahead of a meeting of the Group of Ministers (GoM) and the Union Cabinet to finalise infusion of additional equity of an estimated Rs 6,600 crore.

Both the GoM and the Cabinet are expected to review the steps being taken by the ailing national carrier to enhance revenues and check its mounting debt.

The national carrier recently floated a global tender to dry-lease eight B 777-200 (Long Range) aircraft, four of which were manufactured in 2007, one in 2008 and three in 2009.

The move came days after it decided to sell and leaseback seven of its Dreamliners and started looking for bridge financing worth USD 230 million.

Leaseback is an arrangement in which a party sells a property to a buyer who immediately leases the property back to the seller. This allows the initial buyer to make full use of the asset while not having capital tied up in it. Leaseback sometimes provide tax benefits too.

The decision to lease out the Boeing 777s came in the backdrop of the planned induction of the B 787s, the first of which is expected to arrive later this month. The second Dreamliner would be inducted in March, the third in April and two each in May and June.

The officials said the composite-material built Dreamliners would replace the B-777s on the long-haul, non-stop routes like those to the US and Canada. The airline is also contemplating launching direct flights to Australia with these aircraft, the sources said.

Air India is also looking for interim bridge financing for accepting delivery of the first two B 787-8 planes and has invited offers from banks and financial institutions to arrange for USD 230 million or equivalent of cost of two planes.