Cash strapped Air India is set to halve an order for Boeing 787 Dreamliners and prune overall fleet expansion plans as the government sets tough terms for an equity infusion.
The airline’s board of directors on Thursday approved a proposal - which is being sent to the ministry of finance - slashing the purchase order from 27 to 14 Dreamliners.
Sources said final decision will rest with the ministries of finance and civil aviation since the government will have to fund the purchase.
The move comes just after the Comptroller & Auditor General (CAG) ticked off the airline management for undue haste in ordering aircraft earlier. The Dreamliners are part of the same order.
Deliveries are delayed by over three years and the first aircraft is expected only this December.
The aircraft are crucial for Air India’s turnaround since the airline currently lacks any medium-haul aircraft in its fleet. Once the aircraft start arriving, the airline would reopen lucrative sectors such as Malaysia.
Air India has been seeking compensation from the Boeing Co for delayed deliveries and the aircraft manufacturer has been told about the Rs6,000 crore estimated revenue loss because of the delay.
Now, if only 14 will be taken, the ailing national carrier will have to rework its route expansion plans, specially in the medium haul international destinations. Then, sources also tell us that Thursday’s board meeting cleared the revised turnaround plan of the airline, devised by SBI Caps.
Against fleet expansion by 138 aircraft proposed earlier, only 130 will be added now. “But the most significant decision taken today is that all these aircraft will be taken on lease, not bought, except the Dreamliners,” sources said.
Meanwhile, the airline said in a statement that the board meeting was the first after Rohit Nandan took over as chairman and managing director. It said that the airline’s performance improved in August: passenger revenue was up to Rs998 crore (Rs 889 crore), passenger count rose to 1.09 million (1.07 million) and passenger load factor rose 73.1% (64.3%).