Airline News
Air India struggles with the B787, Jet eyes fleet sell-off
May 4th 2015
Last month, the U.S. Federal Aviation Administration (FAA) restored India’s safety rating to Category 1, meaning it complies with the international safety standards set by the International Civil Aviation Organization (ICAO), 15 months after India’s latest downgrade in January 2014. Read More » With the top rating back in place, Indian carriers will be allowed to add operations to the U.S. using their own aircraft and carry the code of U.S. airlines on their services.
However, India’s airlines might not be able to reap all the benefits from the relaxation as they struggle to optimize their fleets to match route economics. Air India has reiterated it is looking at converting some of its seven remaining B787-8 orders into commitments for the larger -9 variant. "We are in discussions with Boeing. We will not be paying any extra money for the bigger -9 planes and may induct less than seven planes. All of these are being discussed," Air India managing director, Rohit Nandan, was quoted as saying in India’s The Economic Times.
At press time, the Delhi-based carrier operated 20 B787-8s, with the 21st frame scheduled for service entry in June. India’s Financial Express earlier last month reported the flag carrier was losing money on all its B787-operated routes, but said five routes (incl. Delhi – Moscow) were performing particularly poorly as “variable costs were not met”. The Prime Minister’s Office has asked Air India to submit a detailed performance report on its revival plan, including the latest figures for the B787 fleet.
At rival carrier, Jet Airways, the executive team is too set on improving the bottom line. While the airline said it has no plans to reduce its international operations, sources have suggested Jet’s management is exploring both an outright sale and a sale-lease-back of its wide-body fleet to raise cash and retire a portion of its significant debt.
At press time, Jet had 22 wide-body planes (ten Boeing 777-300ERs and twelve Airbus A330-200 aircraft), with six A330s on operating lease and the remaining 16 on financial lease. However, it only uses five B777s and seven A330s; the remaining ten aircraft are on lease to Etihad Airways and Turkish Airlines. Later this month, Jet will seek shareholders’ approval to raise up to $400 million from “issuing secured and/or unsecured, listed and/or unlisted non-convertible debentures and/or subordinated debt instruments”.
