The transaction has partly financed Air India's purchase of an A350-900 aircraft from Airbus.
Credit: PTI Photo
Mumbai: Japanese lender Sumitomo Mitsui Banking Corporation (SMBC) on Wednesday said that the Tata Group-owned Air India has borrowed Rs 997 crore ($120 million) from it for purchasing a wide-body aircraft from Airbus.
The transaction has partly financed Air India's purchase of an A350-900 aircraft from Airbus, which was delivered in October 2023, according to an official statement.
SMBC said this is a secured debt facility through its Singapore branch, while Air India's GIFT City-headquartered arm AI Fleet Services is the borrower.
The purchase is part of the mega announcement by the Tatas to buy a total of 470 aircraft from Boeing and Airbus, and AI has also contributed equity.
According to some reports, an Airbus A350-900 aircraft is priced above Rs 2,494 crore ($300 million).
"SMBC Group is pleased to expand upon its long-established relationship with Tata Group through this deal," the lender's country Head for India Hiroyuki Mesaki said.
He added that this is the bank's first-of-its-kind transaction for aircraft finance lease.
Nipun Aggarwal, Air India's Chief Commercial and Transformation Officer, said the aircraft was among the first deliveries in the company's large aircraft order announced earlier this year.
"This transaction is also a major step in expanding our aircraft financing business through GIFT City, India's first International Financial Services Centre (IFSC)," Aggarwal added.
The SMBC statement said India is the fifth largest aviation market globally, and the sector is expected to continue growing significantly on tailwinds like emergence of a large and growing middle-class willing to travel.