Air India's parent company National Aviation Co of India (Nacil) is receiving a $1.06 billion loan from JPMorgan Chase & Co to fund most of its purchase of 10 Boeing passenger aircraft.
It obtained the loan in May and the US Export-Import Bank (US Ex-Im Bank) will guarantee it, says the state-owned carrier. Air India, which is carrying debts of $3.2 billion, adds that it has never defaulted on any of its loans.
It will use the funds to pay for three 777-200s and four 777-300s that it plans to operate on international routes, and three 737-800s for domestic routes. These are part of an order for 68 Boeing aircraft and 43 Airbus aircraft placed in 2005.
In March, the airline raised $1 billion from a consortium led by IDBI Bank to fund the purchase 21 Airbus passenger aircraft.
Air India has taken delivery of 48 of the 111 aircraft it has on order, and has no plans to defer the remainder despite a tough economic environment and a crowded Indian aviation market. It says that it is waiting to see how the Indian economy recovers, and adds that the new aircraft are also coming in as it steadily sells older ones and returns leased aircraft.
In June Air India carried 6.5 million passengers, according to a statement from the civil aviation ministry. It had 18% of the market, behind Kingfisher with 24.4% and Jet Airways/JetLite with 23.9%. Air India's load factor was 68% in June.
The airline, which made losses of around 50 billion Indian rupees ($1.02 billion) for the financial year ending 31 March, has asked the Indian government, its owner, for a bail-out.