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NEW DELHI – A panel of senior Indian ministers tasked with overseeing a turnaround plan for Air India Ltd. will meet later this month to decide on the national carrier's order for 27 Dreamliner 787 planes from Boeing Co. , a top official at the civil aviation ministry said.
The meeting, scheduled for the week to Oct. 22, comes as Boeing gets set to deliver the first Dreamliner plane to Air India in this quarter, following a delay of more than three years. Air India wants to take the planes to expand its long-haul operations and intensify competition with carriers in the Middle East, Europe and the U.S.
"The group of ministers will discuss whether it makes commercial sense for Air India to buy the Dreamliners or not," the official said late Tuesday.
He said the government wants also to ensure that Air India has the financial capability to pay for the Dreamliner planes instead of seeking federal assistance in the future.
The panel will decide whether to ask Air India to cancel or defer the delivery of the Dreamliners, the official said. The list price for each Dreamliner aircraft as of 2010 was $185.2 million, but airlines usually get a discount on this price.
The 27 Dreamliners are part of a total of 111 planes ordered by Air India and the erstwhile Indian Airlines from Boeing and Airbus. Air India ordered 68 planes from Boeing in December 2005, and Indian Airlines ordered 43 planes from Airbus in February 2006. Air India and Indian Airlines were merged in 2007 to form Air India Ltd.
Air India has been incurring losses post its merger due to falling load factors and higher fuel costs. It was also hurt by the large aircraft order.
The Indian government has injected a total of 25 billion rupees ($510 million) into the carrier in the last two fiscal years and has assured another 12 billion rupees this fiscal year through March 2012.
Apart from the Dreamliners and three other Boeing planes, Air India has taken delivery of all the other aircraft in the 111-plane order. It is scheduled to take delivery of the first seven Dreamliners between November and March.
The panel of ministers, headed by Finance Minister Pranab Mukherjee, will also discuss Air India's financial turnaround plan, which includes reworking its network, increasing its fleet size, restructuring debt, hiving off businesses into separate units and diverting excess workforce to the new units, the official said.
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