* Managing director says deal to be funded through equity
* Says engine deal to save costs by 11 pct
* In talks with infrastructure providers for direct fuel
(Adds details, quotes, background)
By Anurag Kotoky
NEW DELHI, Feb 15 Low-cost Indian airline
GoAir's engine supply deal with United Technologies Corp's
(UTX.N) Pratt & Whitney unit is valued at about $1 billion,
managing director Jeh Wadia said.
The privately held airline, which has a market share of
about 6 percent in India, ordered 72 A320 aircraft from Airbus
EAD.PA last year for about $7.2 billion.
Pratt & Whitney will supply about 150 engines when the
planes are delivered between 2015 and 2020, Wadia said in an
interview on Wednesday. The deal will be funded through a
combination of equity and debt, he said.
"The reason why we chose these engines is because they will
give us fuel efficiency of more than 15 percent in total, and
that would relate to 11 percent improvement in direct operating
cost," Wadia said by phone from Mumbai.
Indigo, the only major Indian airline that is making a
profit, also ordered 150 Pratt & Whitney engines for planes it
ordered from Airbus last year.
Wadia declined to reveal GoAir's debt load but said the
company would be "extremely profitable" on an operating basis if
fuel costs had not risen. He did not elaborate.
India's airlines, burdened by $20 billion of debt and
fighting high fuel costs and low fares, are desperately seeking
changes in government policies to help their business.
In a move that could help local airlines get access fresh
funding, India's Aviation Ministry said recently that it would
recommend that the government allow foreign airlines to buy
stakes of up to 49 percent in Indian carriers.
Foreign airlines are currently barred from buying into
Indian airlines, though foreign investors can hold a cumulative
49 percent stake.
"We are not in any hurry, but we will look at the
opportunity when it arises," said Wadia, referring to the
possibility of investment by a foreign carrier.
A government panel earlier this month recommended that
India's cash-starved airlines be allowed to import jet fuel
directly, a break that could help them cut fuel costs by up to
20 percent by avoiding some state taxes.
GoAir is in talks with several companies to provide
infrastructure that would allow it to import jet fuel once the
government formally gives the go-ahead, Wadia said.
"There are bottle-necks in infrastructure and logistics, but
we are trying to find solutions and hope to find solutions," he
Go Air is controlled by the Wadia Group, which also controls
Bombay Dyeing (BDYN.NS), where Wadia is also managing director,
and Britannia Industries Ltd (BRIT.NS).
(Reporting by Anurag Kotoky; Editing by Rajesh Pandathil and
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Keywords: GOAIR PRATT&WHITNEY/DEAL
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