Tata's Air India to seal world's biggest aircraft deal ever

Tata Sons Ltd., the new owner of Air India Ltd., is in talks with a number of banks to help fund the carrier's recently announced record aircraft order, which it is leveraging to attract new customers, the carrier's CEO said. 

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CEO Campbell Wilson told Trade Algo on Monday in New Delhi outside of the CAPA India Aviation Summit, "We have the backing of Tata Sons, therefore there is money available for these aircraft. We have already used some of our internal funds as down payments for these planes."

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Both Boeing Co. and Airbus SE have received orders from Air India for 470 aircraft, and deliveries are scheduled to begin at the end of the current year. For purchases this big, discounts are customary.

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Wilson stated last month that the formerly state-run carrier will use cash, shareholder stock, and the sale and leaseback of aircraft to help finance the purchase. Air India wants to compete with airlines like Emirates and Qatar Airlines, which control profitable routes from India to the US and Europe via their hubs in Doha and Dubai, respectively, and are expanding their fleet.

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Wilson didn't specify the banks that Air India is speaking with.

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India has returned to pre-Covid levels of aviation travel more quickly than most other countries, thanks in part to a robust domestic market and expanding middle class. According to the Sydney-based CAPA Centre for Aviation, domestic air travel would increase by 20% to 160 million passengers in the year ending March 2024, and by 2030, the country's airlines may run a fleet of 1,400 jets.

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To satisfy soaring demand, India plans to invest approximately 980 billion rupees ($12 billion) in airports over the next two years, including new terminal construction and facility renovations. Smaller cities with low penetration rates of air travel may contribute significantly to that increase.

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The director general of the Association of Asia Pacific Airlines, Subhas Menon, stated that India has been "punching below its weight" over the past few decades. The government is taking the proper steps to develop the area's potential as an aviation center."

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To create a single, full-service airline, Air India is getting ready to combine Vistara, a joint venture between Singapore Airlines Ltd. and Tata Group. The airline is investing $400 million to modernize its widebody aircraft, including new items for all seats and in-flight entertainment systems.

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Tata, the biggest company in India, acquired Air India from the government in 2021 for $2.4 billion. Prime Minister Narendra Modi's high-profile privatization put an end to decades' worth of attempts to sell the bankrupt, indebted carrier that had been sustained by years of taxpayer bailouts.