Indian raises $500 mn loan from Germany-based KfW Bank

State-owned carrier Indian has raised a loan of $500 mn (Rs. 2250 crores) from Germany-based KfW IPEX-Bank to finance the acquisition of 43 Airbus aircrafts. The airline has commissioned the bank to finance the first batch of 10 aircrafts. Repayment tenure of the loan is 12 years. Indian had placed an order for the purchase of 43 Airbus aircraft last year, the first of which was delivered in October 2006. The public sector airline will use these aircraft to extend its network beyond south-east Asia and the Gulf region.

The KfW bank has also signed for a 50:50 joint underwriting agreement with the Germany-based HSH Nordbank. Subsequent syndication in the international bank market is envisaged by the underwriters. The KfW bank specialises in financing of complex transport and infrastructure investments.

Read more in the article in The Economic Times.

Air India, Indian merger to be cleared by Union Cabinet by Feb-end

The merger of India’s international airline Air India and domestic carrier Indian may get clearance by the Union Cabinet by February-end. The Committee of Secretaries has submitted its recommendations regarding the merger to the Group of Ministers (GoM) headed by External Affairs Minister Pranab Mukherjee. The GoM will meet soon for a final consideration of the recommendations before sending it for the Union Cabinet’s approval. Once the Cabinet approval is received, the two carriers will undertake the legal steps necessary for the merger which should be completed within 3-4 months. However, complete operational and manpower integration will take as much as 12-18 months. Total integration of the two carriers would be completed by end-2008.

The merged entity will become one of Asia’s largest airlines with a fleet strength of more than 100 aircrafts. It will have one chairman and one board of directors. It will also add more aircrafts and introduce new routes. The advantages accruing from the merger would comprise additional capacity, additional routes and staff rationalization as excess staff could be deployed on new routes. Following the global trend, the merged entity will cater to both international and domestic markets.

Read The Economic Times article.