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NACIL decided to bridge loans for aircraft deliveries

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MUMBAI (PTI): Air India decided to go for bridge financing of its aircraft deliveries this year but deferred plans to redeploy its manpower and appoint a global consultancy firm to work on its commercial transformation project.

The decisions were taken at a Board meeting of the National Aviation Company of India Limited (NACIL), which also reviewed a series of cost-cutting measures ahead of getting an Rs 800-crore equity infusion from the government, airline sources told PTI on Saturday.

The Board, which met here, approved the management's proposal for bridge loans for aircraft deliveries this year, the sources said. Bridge financing is a short-term loan extended to a borrower by a bank to meet its immediate funding requirements.

Air India is likely to take delivery of three Boeing 777 aircraft this year, valuing around Rs 700 crore. Full payments for planes ordered are expected to be made when they are delivered.

"The Board was supposed to take up the manpower redeployment issue in the airline. But this issue did not come up for discussion at all," the sources said.

"In case of a wet-lease, it is around USD 6,400 per flying hour," he said.

Broadly in a dry-leasing arrangement, the lessee arranges and pays for the crew, fuel, and maintenance, while in wet-lease, the lesser airline provides the plane, its complete crew, pays for its maintenance and insurance to another airline which makes its payment by the number of hours operated.

Air India, which recorded a loss of Rs 5,548 crore in 2008-09 compared to Rs 2,226.16 crore in 2007-08, is focusing on cutting costs by Rs 1,500 crore and increasing revenues by Rs 1,200 crore as per its turnaround plan.

As part of this plan, the national carrier is phasing out its own leased aircraft besides putting its surplus aircraft on lease to cut cost and raise funds.

The turnaround plan has been broadly divided into 0-9 months, 9-18 months and 18-36 months and has been segregated under operational efficiency, product improvement, organisation building and financial restructuring.

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