CAG asks why Air India sold five Boeing 777s at loss to Etihad in 2013

NEW DELHI: The Comptroller and Auditor General (CAG) has sought the civil aviation ministry's response on why state-run carrier Air India sold five Boeing 777s at a loss to Etihad in 2013, during the tenure of the previous United Progressive Alliance government.

"The CAG's query addresses two aspects - one is of selling the aircraft only after six years of operations, when they were meant to fly 25 years, and the second is on selling it at much lower that its cost price," said a civil aviation ministry official, who did not want to be identified. The initial query is part of the CAG's inquiry procedure.

Etihad's purchase of five Boeing 777-200s from Air India for $350 million had been raised in media reports at the time and cited by former comptroller and auditor general Vinod Rai in his 2014 book 'Not Just an Accountant'.

"Why did we make purchases and within five years of the delivery of the aircraft, sell them at roughly 427 crore each to Etihad Airways after having purchased them in 2005 for 1,300 crore per aircraft?" Rai said in his book. Other sources told ET that Air India sold each plane at an estimated loss of more than 500 crore on the purchase price.

Source: http://goo.gl/SgnoES