Air India secures $120M loan from SMBC for Airbus acquisition
- ByStartupStory | December 20, 2023
Air India, owned by the Tata Group, recently secured a $120 million loan from Japanese lender SMBC for the acquisition of a wide-body Airbus aircraft. This transaction, facilitated by SMBC’s Singapore branch, was utilized to partially fund the purchase of an A350-900 aircraft from Airbus, which was delivered in October 2023, as confirmed by an official statement.
The borrowing entity, AI Fleet Services, headquartered in GIFT City, India, entered into a secured debt facility with SMBC. This acquisition forms part of the Tata Group’s monumental initiative to procure a total of 470 aircraft from Boeing and Airbus, with Air India contributing equity to the venture. Notably, reports suggest that the Airbus A350-900 is priced above $300 million.
Commenting on the collaboration, Hiroyuki Mesaki, SMBC’s country head for India, expressed satisfaction in strengthening their longstanding ties with the Tata Group. He highlighted the significance of this particular transaction as SMBC’s pioneering endeavor in aircraft finance leasing.
Nipun Aggarwal, Air India’s chief commercial and transformation officer, emphasized the significance of this aircraft acquisition. He remarked, “This aircraft was among the first deliveries in the company’s substantial aircraft order announced earlier this year.”
Aggarwal further underscored the strategic importance of the transaction in expanding their aircraft financing business within GIFT City, India’s premier International Financial Services Centre (IFSC).
The SMBC statement emphasized India’s position as the fifth-largest aviation market globally, projecting continued substantial growth. It cited factors such as the emergence of a sizable and expanding middle-class population eager to explore travel opportunities as the driving forces behind the aviation sector’s anticipated expansion.
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