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Airbus closer to sealing IA fleet purchase deal
Friday, 13 June 2003, 19:30 IST
NEW DELHI: European consortium Airbus Industrie is inching closer to bagging a multibillion-rupee contract to provide 43 new aircraft to Indian Airlines (IA) after a bitter competition with its American rival Boeing.
Civil aviation ministry officials said with the pre-Public Investment Board (PIB) clearing the proposal, the aircraft purchase would be final after clearing two more levels -- the PIB and a cabinet panel.
"Indian Airlines had recommended purchase of fleet from Airbus Industrie in March last year. There may have been some delay, but nothing has changed since then," a senior aviation ministry official told IANS.
The state-owned domestic airline will acquire 43 planes for 
100.89 billion, a decision that was approved and recommended by the pre-PIB that precedes the meeting of the PIB.
The official said the France-based aviation major's financial bid would be deemed valid and no fresh bids would be sought.
Indian Airlines had picked 20 Airbus A-319s, 19 A-321s and four A-320s to be delivered in a four-year period beginning 2004. Last year the purchase amount was fixed for $2.2 billion at the rate of 49 to a dollar.
"The exchange rate is now 47 to a dollar, so the airline does not stand to lose," said the ministry official.
Thursday's meeting was chaired by V. Subramanium, the financial advisor to the civil aviation ministry, and featured representatives of the ministries of civil aviation, finance and environment as well as the Planning Commission.
An IA official said the airline still had to reply to a query seeking justification for the purchase on the basis of its projections for growth of traffic.
The airline was also concerned about the finance ministry's refusal to provide any guarantee for loans, which could have it shelling out a higher rate of interest.
Since the IA board approved the purchase of planes for replacement of its ageing fleet from Airbus, Boeing had stepped up its campaign for a part of the contract by offering price cuts and even getting top U.S. officials to lobby with the government.
The intense lobbying by the rival manufacturers stalled the fleet purchase for a long time until the momentum picked up after the government firmly set aside the proposed disinvestment of its equity in IA and Air-India.
International carrier Air-India also intends to purchase 17 long-haul aircraft over the next five years to revamp its ageing fleet and expand operations.
Source: IANS
100.89 billion, a decision that was approved and recommended by the pre-PIB that precedes the meeting of the PIB.
The official said the France-based aviation major's financial bid would be deemed valid and no fresh bids would be sought.
Indian Airlines had picked 20 Airbus A-319s, 19 A-321s and four A-320s to be delivered in a four-year period beginning 2004. Last year the purchase amount was fixed for $2.2 billion at the rate of 49 to a dollar.
"The exchange rate is now 47 to a dollar, so the airline does not stand to lose," said the ministry official.
Thursday's meeting was chaired by V. Subramanium, the financial advisor to the civil aviation ministry, and featured representatives of the ministries of civil aviation, finance and environment as well as the Planning Commission.
An IA official said the airline still had to reply to a query seeking justification for the purchase on the basis of its projections for growth of traffic.
The airline was also concerned about the finance ministry's refusal to provide any guarantee for loans, which could have it shelling out a higher rate of interest.
Since the IA board approved the purchase of planes for replacement of its ageing fleet from Airbus, Boeing had stepped up its campaign for a part of the contract by offering price cuts and even getting top U.S. officials to lobby with the government.
The intense lobbying by the rival manufacturers stalled the fleet purchase for a long time until the momentum picked up after the government firmly set aside the proposed disinvestment of its equity in IA and Air-India.
International carrier Air-India also intends to purchase 17 long-haul aircraft over the next five years to revamp its ageing fleet and expand operations.
Source: IANS