Tata Group-owned Air India on Thursday signed an agreement with Florida-based Willis Lease Finance to sell 34 old engines and lease back their fresh replacement in order to reduce maintenance costs and avoid unpredictable upkeep visits.
The 34 old CFM56-5B engines have been powering Air India’s four A320ceo aircraft and 13 A321ceo aircraft. Air India had put the purchase order for these 17 planes with European plane maker Airbus in 2006, and they were delivered to then national carrier between 2008 and 2010.
Air India’s Chief Commercial Officer (CCO) Nipun Aggarwal said the transaction with Willis would enable the airline to eliminate the maintenance burden and fully de-risk itself from the maintenance cost uncertainty associated with the engines which were not covered under any “Power By The Hour” programme with the engine makers.
Under “Power By The Hour”, a certain amount is paid to the engine maker for each hour the aircraft flies, and this amount is used for future maintenance requirements.
“This transaction will allow Air India to improve fleet reliability, reduce cost, and optimise cash flows,” Aggarwal said.
According to the agreement signed between Air India and Willis, the lessor will purchase the 34 engines from the airline and it will provide “replacement and standby spare engines, allowing Air India to avoid potentially costly and unpredictable shop visits on engines powering a transitioning aircraft fleet”.
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Willis will also have an in-country team to co-ordinate and manage the entire programme and all logistics and transportation involved, it added.
Air India has 113 planes in its fleet currently. Its narrow-body fleet comprises 70 aircraft, of which 54 are in service. Its wide-body fleet stands at 43 aircraft, of which 33 are operational. The rest of the existing narrow-body fleet and the wide-body fleet will progressively return to service by early 2023, according to Air India.
A wide-body plane like B777-200LR has a bigger fuel tank, allowing it to travel longer distances such as India-US routes. Narrow body planes like A320ceo and A320neo have smaller fuel tanks.
Earlier this month, Air India had announced it leased 30 planes — 21 A320neo, four A321neo, and five B777-200LR — to expand its flight operations. These 30 leased planes will be delivered to the airline by December 2023.
This means that by the end of 2023, the airline plans to have a fleet of 143 planes. After winning the bid to purchase Air India on October 8 last, the Tata Group took control of the carrier on January 27.