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Air India's Skyward Ascent, Secures $120 Million from SMBC for Airbus A350-900 Purchase

Tata Group's Flight Ambitions Soar with SMBC's Historic Aircraft Finance Deal

20 December 2023

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Kunal Tyagi

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  • Air India, a Tata Group-owned entity, secures a significant loan of Rs 997 crore (approx. $120 million) from Sumitomo Mitsui Banking Corporation (SMBC) for the acquisition of an Airbus A350-900 aircraft.

  • The financing, executed through SMBC's Singapore branch, is a secured debt facility, with AI Fleet Services, Air India's GIFT City-based arm, serving as the borrower.

  • The loan facilitates the delivery of the A350-900 aircraft in October 2023, marking a crucial milestone in Tata Group's plan to acquire a total of 470 aircraft from Boeing and Airbus, showcasing the growing cooperation between Japanese financial institutions and Indian aviation companies.

In a significant development, Sumitomo Mitsui Banking Corporation (SMBC) announced on Wednesday that Air India, a Tata Group-owned entity, has successfully borrowed Rs 997 crore (approximately $120 million) from the Japanese lender for the acquisition of a wide-body Airbus A350-900 aircraft. 


This transaction, executed through SMBC's Singapore branch, represents a secured debt facility, with Air India's GIFT City-headquartered arm, AI Fleet Services, as the borrower. The loan has played a pivotal role in facilitating the delivery of the A350-900 aircraft in October 2023, marking a crucial milestone in the Tata Group's ambitious plan to procure a total of 470 aircraft from both Boeing and Airbus.


Hiroyuki Mesaki, the country head for India at SMBC, expressed satisfaction in expanding their longstanding relationship with the Tata Group through this deal. He highlighted that this transaction is a landmark for SMBC, representing their first-of-its-kind venture into aircraft finance lease. The move not only strengthens the financial ties between SMBC and Tata Group but also underscores the growing cooperation between Japanese financial institutions and Indian aviation companies.


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Nipun Aggarwal, Chief Commercial and Transformation Officer at Air India, emphasized the strategic significance of this financing arrangement. He mentioned that the A350-900 aircraft's delivery aligns with Air India's broader plan to enhance its fleet through the acquisition of a large number of aircraft. Aggarwal also emphasized the role of this transaction in expanding Air India's aircraft financing business, particularly through GIFT City, India's first International Financial Services Centre (IFSC).


The SMBC statement underlines the economic potential of the aviation sector in India. As the fifth-largest aviation market globally, India is poised for continued growth, driven by factors such as the emergence of a large and expanding middle class with a willingness to travel. The financing deal with SMBC not only provides Air India with the means to acquire state-of-the-art aircraft but also positions the airline for a more robust presence in the dynamically evolving Indian aviation landscape.


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