Defending itself against the criticism of the Comptroller and Auditor General (CAG), Air India has defended the sale of five Boeing 777-200 LR planes to Etihad, saying it was the best option to check loss and reduce debt.
The CAG has criticised Air India for selling the aircraft below its indicative market price, under-reporting its losses and poor initiatives to monetise its real estate.
Air India inducted eight Boeing 777-200 Long Range aircraft in 2005 to serve the US with non-stop flights but the operations turned loss-making because the airline was unable to generate the expected loads and yields. In 2014 Air India sold five of the planes to Etihad for $336.5 million ($67.3 million per aircraft). While the CAG has rapped the airline for selling the aircraft at a loss, Air India has said the benchmark of the sale price was not available at the time of the transaction.
“There are very few operators of Boeing 777-200LR and no sale of aircraft had taken place in the secondary market. Thus, the benchmark of the sale price was not available. Even in the reports of valuers, it was apparent that the market price of $86-92 million per aircraft was indicative in nature,” said Air India’s Advisor (Finance) S Venkat.