Gati freezes out Air India

INDIAN logistics firm Gati has cancelled its wet-leasing of five Boeing 737-200 freighters from the National Aviation Company of India Ltd (NACIL), which owns Air India.

“Consequently, the freighters leased by Air India have also been withdrawn with immediate effect. However, the strategic alliance with Air India is being continued as usual without affecting air cargo movement business,” Gati said in a statement.

A senior Air India official told the Indo Asian News Service the move would not affect the company’s future plans to expand its airfreight operations, but would not discuss why Gati suspended the contract.

As reported in Air Cargo News in February, Air India’s financial difficulties have even made it difficult to pay employees’ wages. The carrier has already asked the civil aviation secretary for a soft loan of Rs 27.5 billion (US$500 million) and an equity infusion of Rs 1.2 billion ($24 million) to “strengthen the balance sheet and infuse confidence among institutional lenders to support the aircraft acquisition program”.

The state carrier has suffered a significant loss in revenue from the steep decline in demand and having $8.1 billion tied up in funds for the purchase of 30 aircraft.

The airline expects to have 40 freighters by 2015. “We are looking to convert six of our Boeing 747-400s (to freighters) by 2012,” he added.