Air India has signed a sale and leaseback deal with Willis Lease a Florida-based aviation finance company. Willis Lease specializes in leasing, financing, and managing aircraft, spare commercial engines, and auxiliary power units.
The newly signed deal will help Air India save maintenance costs and the carrier will receive 34 engines to power 17 aircraft of the Airbus A320 family.
About the deal with Air India
The agreement with Willis Lease is a purchase and leaseback deal that will see the Florida-based aviation service provider purchase 34 CFM56 – 5B engines to power 13 Airbus A321 aircraft and 4 Airbus A320 aeroplanes from Air India and then lease it back to the airline.
Willis Lease, as a part of the deal, will provide replacement and standby spare engines. According to an Air India spokesperson, Willis Lease will have an in-country team dedicated to coordinating and managing the entire program and all the logistics and transportation involved with the whole process.
As a result of the agreement, Air India will be able to eliminate the maintenance burden and de-risk itself from the maintenance cost and uncertainties associated with aircraft engines.
The deal will help Air India improve fleet reliability, reduce operational costs, and optimize cash flows, according to the airline’s Chief Commercial Officer, Mr Nipun Aggarwal.
With this deal, things will start moving fast again at Air India as grounded aircraft will be operational while new aircraft are expected to join the fleet.
Air India, which currently has 113 aircraft in its fleet, of which only 87 are operational, has been on a transformation path since the takeover by the Tata Group in January 2022.
With the inoperative aircraft expected to return to service by early 2023, the airline has also signed up for 21 Airbus A320neos, 4 Airbus A321 NEOs, and 5 Boeing B777 – 200LRs, in a leasing deal that is set to expand the Air India fleet by 25%. These aircraft are expected to enter the Air India fleet by the end of 2022.
Air India holds an 8.5% market share in the domestic aviation sector and aims to achieve a minimum of 30% market share by 2027, which is five years.