Air India has become the first major airline to set up a leasing unit at IFSC Gift City in Gujarat. The airline’s six A350s, which are slated to be inducted into the fleet, will come through the leasing firm AI Fleet Services IFSC Limited under a financial lease, sources claim. The estimated project cost is INR 7.253bn.
Air India’s ‘AI Fleet Services IFSC Limited’ was approved earlier this month during the SEZ meeting held on August 7. This will function as a subsidiary of Air India with Vinod Hejmadi, chief financial officer, Air India, Kalpana Rao, secretary, Air India and Abhijit Menon as a part of the top management at the leasing unit.
The entity has an authorised capital of INR 500 million and a paid-up capital of INR300 million.
“Air India has placed an order for the procurement of 470 aircraft from Airbus and Boeing through leasing and financing. Out of these 470 aircraft, the near-term delivery of six Airbus A350 aircraft (long-range, wide-body. twin-engine jet airliner) is planned to be financed through the proposed entity.” It further added that the proposed entity will be engaged in leasing (both operating and finance) business for their parent company, Air lndia, and its subsidiaries only,” reads a Special Economic Zone (SEZ) approval committee document viewed by BusinessLine.
Though it is unclear whether the other aircraft will also come through AI Fleet Services or not, another person in the know said, “It’s too early to comment on that but viability has to be considered.”
On the financial aspect, the document stated that the “Free on Board (FOB) value for the export (inflow) of services for a five-year period is projected at INR 16.84bn with a projected import (outflow) of foreign exchange at INR 16.75bn, resulting in a Net Foreign Exchange (NFE) of 0.093bn crore (0.56%). The cost of the project is estimated at INR 72.53bn.”