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In fresh deal,Airbus to commit $175 mn sops for 2005 aircraft sale

Erstwhile Indian Airlines is set to sign an agreement with Airbus that commits $175 mn in sops..

Written by Smita Aggarwal | New Delhi | Published: April 17, 2012 1:07:30 am

Seven years after it bought 43 aircraft from French plane-maker Airbus Industrie for Rs 8,399 crore,erstwhile Indian Airlines (merged with Air India in 2007) is set to sign a supplementary agreement with the manufacturer where in it will incorporate concessions worth Rs 870 crore ($175 million) extracted by the Empowered Group of Ministers (EGoM) in 2005 when the deal was sealed.

The supplementary agreement is likely to be signed within a month,said a civil aviation ministry official.

“It will include the three concessions that government had finalised — $100 million investment in a maintenance,repair and overhaul (MRO) centre,$75 million in setting up a training centre and a warehouse for aircraft spares,” said the ministry official.

It is,however,still unclear if Airbus will itself set up the MRO or just facilitate its setting up in collaboration with Air India,or any other Indian company. These concessions were not incorporated in the final purchase agreement signed by the airline in 2005 with the French company. This had led to a Central Bureau of Investigation (CBI) enquiry in 2010.

Meanwhile,Airbus has contended that a copy of the minutes of the EGoM meeting held in December 2005 were not sent to it. Therefore it was not party to what was decided by the government,the official told The Indian Express.

“The final purchase agreement reflected what was agreeable to Airbus,” said the official.

The CBI had sought the ministry’s permission earlier this year — for a second time — for prosecuting six of its officials. The ministry denied the permission,asking the investigative agency to reconsider its decision to file an FIR against these officials. While the ministry has sent an interim response to the agency,the official added that they would be sending a final reply after the airline signs the supplementary agreement with the manufacturer. “There has been no loss to the airline on account of the exclusion of the concessions. Airbus has always maintained that it will abide by its commitments,” the official said.

Earlier,Minister of State V Narayanswamy had said in Parliament that the CBI enquiry had allegedly found that “crucial concessions regarding investment of $175 million as worked out during negotiations by the Empowered Group of Ministers with Airbus Industries were deliberately not made part of the purchase agreement signed between Indian Airlines and M/s Airbus Industries”.

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