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Etihad purchases 5 x 777-200LRs from Air India
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rutvij
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Joined: 22 Feb 2007
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Location: Skies of Fire!

PostPosted: Sun Sep 28, 2014 6:07 am    Post subject: Reply with quote

Its off-white/creamy and no airline had it before they came in, but it really shines brightly on nice sunny day!

BTW, those engines don't seem to have the exhaust cone *missing* making them seem like the RR RB211s installed on the classic 747s! Cool


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747-237
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Location: Gordon Gekko's Boardroom

PostPosted: Mon Mar 16, 2015 8:15 pm    Post subject: Reply with quote

http://economictimes.indiatimes.com/industry/transportation/airlines-/-aviation/cag-asks-why-air-india-sold-five-boeing-777s-at-loss-to-etihad-in-2013/articleshow/46577660.cms?prtpage=1

CAG asks why Air India sold five Boeing 777s at loss to Etihad in 2013

16 Mar, 2015

The Comptroller and Auditor General (CAG) has sought the civil aviation ministry's response on why state-run carrier Air India sold five Boeing 777s at a loss to Etihad in 2013, during the tenure of the previous United Progressive Alliance government.

"The CAG's query addresses two aspects - one is of selling the aircraft only after six years of operations, when they were meant to fly 25 years, and the second is on selling it at much lower that its cost price," said a civil aviation ministry official, who did not want to be identified. The initial query is part of the CAG's inquiry procedure.

Etihad's purchase of five Boeing 777-200s from Air India for $350 million had been raised in media reports at the time and cited by former comptroller and auditor general Vinod Rai in his 2014 book 'Not Just an Accountant'.

"Why did we make purchases and within five years of the delivery of the aircraft, sell them at roughly 427 crore each to Etihad Airways after having purchased them in 2005 for 1,300 crore per aircraft?" Rai said in his book. Other sources told ET that Air India sold each plane at an estimated loss of more than 500 crore on the purchase price.

Air India had said that the long-range planes were not fuel efficient and that it was losing money on its overseas flights, including to the US and Japan. Airline executives said it lost 1 crore per flight to the US. It lost money on flights to Japan even with a load of 80%.

These aircraft are not much in demand and there are just a little over 60 of them in operations globally, they said.

The plan had been to sell eight of the planes - the carrier is still trying to find buyers for three of them.

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747-237
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Location: Gordon Gekko's Boardroom

PostPosted: Fri Mar 10, 2017 7:05 pm    Post subject: Reply with quote

http://indiatoday.intoday.in/story/air-india-sold-5-boeing-at-significantly-low-cost-cag/1/901518.html

Air India sold 5 Boeing at significantly low cost: CAG

March 10, 2017

Air India sold its five Boeing planes to Etihad Airways at a "significantly" lower cost than the "indicative" market price of the aircraft, CAG said in a report tabled in Parliament today.

The government-owned Air India sold these five Boeing 777-200 LR planes to the Gulf carrier Etihad for USD 336.5 million (USD 67.3 million per plane) in 2013 against USD 86-92 million per aircraft obtained from two parties --M/s AVITAS and ASCENT, the Comptroller and Auditor General (CAG) observed in its report Turnaround Plan and Financial Restructuring plan of Air India Ltd (AIL).

In its latest report on the airline, the CAG also observed that AIL incurred a book loss of Rs 671.07 crore on the sale of these planes and payment of Rs 324.67 crore towards interest on loans availed for procurement of these aircraft.

The aircraft were delivered to Etihad Airways during the period from January 2014 to April 2014.

According to the CAG, two parties --Etihad Airways of UAE and German Aviation Capital, Frankfurt -- responded to open tender floated by Air India in May 2013.

"The offer of Etihad for a sum of USD 336.5 million for five aircraft (Rs 2071 crore) was highest and was approved by Board (October 2013)," it said.

"Audit observed that the price (of USD 67.3 million per B-777-200 LR aircraft) at which the five aircraft were sold to Etihad Airways was significantly lower than the indicative market price of USD 86-92 million per aircraft obtained by the company from two parties, M/s AVITAS and M/s ASCENT before initiating the sale process," the CAG report stated.

According to the CAG, after opening the financial bid, Air India obtained another valuation of the aircraft from Aviation Specialist Group (ASG) who estimated the then market value at USD 93 million to 96 million and the realisable value to be between USD 65 million to USD 72 million per aircraft.

"Considering that the price offered by Etihad Airways (USD 67.3 million) was within this range of realisable value, AIL accepted the offer. However, it needs to be appreciated that the basis of acceptance was a valuation exercise carried out after opening the financial bids and that the market value of the aircraft could not be realised in the sale," according to the report.

However, Air India Management in its reply to the CAG said, "After much deliberation it was decided that it was in order to sell five B-777-200 LR aircraft so that the outstanding loans on these aircraft could be repaid out of the sale proceeds of the aircraft."

"By doing so, AIL was able to save not only on interest and repayment obligations but also avoided the cost of maintenance of these aircraft in the future," the management said.

The Ministry of Civil Aviation also elucidated and reiterated the views of the management on the offers received on the sale of B-777-200 LR aircraft.

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PostPosted: Thu Mar 16, 2017 5:01 am    Post subject: Reply with quote

http://www.thehindubusinessline.com/economy/logistics/air-india-says-it-saved-money-by-selling-aircraft-to-etihad/article9585791.ece

Air India says it saved money by selling aircraft to Etihad

March 15

Air India on Wednesday said it saved money by selling aircraft to Etihad Airways. The Comptroller and Auditor General had said that Air India sold its five Boeing planes to Etihad at a “significantly” lower cost than the “indicative” market price of the aircraft.

The national carrier sold five Boeing 777-200LR planes to the Gulf carrier for $336.5 million ($67.3 million per plane) in 2013, against a valuation of $86-92 million per aircraft obtained from two parties, M/s AVITAS and ASCENT, the Comptroller and Auditor General had said last week.

Explaining the rationale behind the sale in an exclusive chat with BusinessLine, S Venkat, Executive Director - Finance, Air India, said: “The issue is that the first time we went to the market, there were no buyers for the aircraft. The second time we went, there was only one party for leasing the aircraft and the leasing was at $600,000 per aircraft per month, which did not even meet our expenditure on the aircraft (loan repayment + interest repayment — about $1.1 million per month). So we decided there was no point leasing the aircraft.”

The winning bid from Etihad came in the fourth auction, which quoted the highest amount in an open auction.

“Etihad had quoted $336.5 million for all the five aircraft. That was more than sufficient for us to repay the loan obligation because we had a loan commitment of about $330 million on those aircraft. Secondly, that saved a lot of money as we could extinguish the loan and were able to save $20-30 million on maintenance costs; otherwise, those aircraft were just lying on the ground with very low utilisation.”

Venkat agreed that the valuation of the aircraft was higher than the selling price, pointing out that the lack of buyers for the aircraft in the market was the primary reason the airline couldn’t sell it at the assessed price.

“There were very few of these aircraft in the market, so there was no benchmark on the price we had. We therefore had to depend on valuers. Valuers clearly told us that the aircraft won’t sell for more than 15-20 per cent lower than the valuation because there weren’t enough buyers for the aircraft. I think the money we got for the aircraft was very good as it helped both Air India and the government,” Venkat said.

He also dismissed all other allegations by CAG, which claimed Air India grossly understated losses. He said the airline was in constant discussion with CAG, explaining its stand, and that it followed generally accepted accounting practices.

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