Air India is focusing more on MRO (Maintenance, Repair and Operations) projects. It is not investing more on buying new aircrafts. Rather, it is returning back the leased aircraft. It is also investing on the ground handling operations like Hangar, terminals to improve its engineering. Capital budgeting endeavors of Air India are:
1. Returning of leased aircraft.
2. Phasing out old fleet and consequent reduction of maintenance cost. 3. Reduction of contractual employment & outsourced agencies. Setting up of an Integrated Operational Control Centre (IOCC) in Delhi for close monitoring of the turnaround time of various aircraft in the fleet to optimize aircraft utilization. 4. Closure of some foreign stations including offline offices. 5. Implementation of Quickwin IT Solutions including upgrade of Revenue Management System, introduction of SAP-ERP throughout the network. 6. Deferment of B777-300 aircraft deliveries.
7. Shifting of the Hub from FRA to DEL T3, the state-of-art technology airport effective Winter 2010 8. During the year 2010-11, Air India availed a Bridge loan amounting to US$473 million for financing 3 B777-300ER aircraft and 1 GE spare engine. Subsequently, this Bridge loan was re-financed through US Exim financing in August 2011 at a highly competitive interest rate structure resulting in savings of Rs.800 million p.a. by way of interest. Similarly, the loan for acquisition of Airbus aircraft amounting to Rs.55000 million given by a Consortium of Banks led by IDBI was refinanced in September 2011 with the ICICI Bond issue maturing in 15-20 years at a lower rate of interest which resulted in a saving of approximately Rs.1800 million p.a. 9. MRO-JV with Boeing- A major portion of the Company’s existing MRO facilities caters to its own fleet requirements. The Company has created a Strategic Business Unit for MRO to reduce cost, attract third party work and improve turnaround time. Boeing had committed to...
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