Tuesday, March 5, 2024
HomeAirline NewsAir India weighs $1 billion in expansion

Air India weighs $1 billion in expansion

Air India Ltd. is considering raising at least $1 billion in a financing round that could value the carrier at about $5 billion, according to people familiar with the matter.

The carrier, controlled by India’s oldest conglomerate Tata Group, is in talks with potential investors, including private equity funds and sovereign wealth funds, the people said. Air India is working with financial advisers to raise funds that could be completed in the next few months, said the people, who asked not to be identified because the information is private.

Negotiations are ongoing and details of the funding round, including size and timeline, could still change, the people said. A Tata Group representative declined to comment, while an Air India representative did not immediately respond to an email seeking comment.

The fundraising plans come as Air India is considering ordering up to 300 narrow-body jets, Bloomberg News reported in June. The purchase could be one of the biggest deals in commercial aviation history as the formerly state-run airline looks to overhaul its fleet under new ownership.

Air India, once known for its premium service and advertisements featuring Bollywood stars, still has lucrative landing slots at most major airports, but faces competition from foreign airlines with nonstop services to India as well as carriers that fly through Middle Eastern hubs. Bulk ordering of new aircraft, especially with favorable long-term maintenance terms, would help Air India reduce costs and better compete with lower-priced rivals.

The carrier announced on Friday that it will gradually launch 20 more weekly flights to San Francisco, London and Birmingham starting next month. Its flights to the US and UK will increase to 40 and 48 weekly respectively.

Tata Group completed the acquisition of Air India in January after beating others to a $2.4 billion bid last year. The deal marked the country’s most significant privatization under Prime Minister Narendra Modi and ended decades of attempts to privatize the money-losing, debt-laden airline and years of taxpayer bailouts. Tata is expected to consolidate its aviation business, including four airline brands.

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