Indian Airlines’ US$2.2 billion purchase of Airbus jets scrutinised as probe intensifies
- Officials are examining whether a US$20 million payment made to Airbus by Indian Airlines contained bribes
- The state-owned airline had bought 43 Airbus jets in 2006, and committed to provide aircraft-overhaul facilities that were never built, a source says
India’s Enforcement Directorate is inspecting a payment of 1.42 billion rupees (US$20 million) linked to the 2006 purchase of 43 jets by Indian Airlines, as well as a commitment to provide aircraft-overhaul facilities that were never built, according to the person, who asked not to be named as the matter isn’t public.
All told, the investigation is examining benefits to Airbus of 10 billion rupees, the person said. That’s the equivalent of about US$140 million.
The Enforcement Directorate did not respond to two phone calls seeking comment, while a spokesman for Airbus declined to comment.
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The decision to reinvigorate the probe in recent weeks suggests Airbus has more fallout to contend with after its record US$4 billion legal settlement for making payments to win jet orders.
“The beauty of the situation from any civil claimant’s point of view is Airbus has spilled the beans on itself,” said Philip Marshall, a trial lawyer at Serle Court Chambers in London. “Depending on the detail there are potentially quite a few civil claims that could arise out of this.”
India is stepping up a probe that began as a police investigation in 2010, four years after the Indian Airlines order for A320-series narrow-body jets, with a team later sent to Europe to question Airbus executives. The government merged the mainly domestic operator with flag-carrier Air India Ltd. a year after the purchase.
Other countries named in the investigation have also begun examining deals involving Airbus.
In Colombia, also on the list, flag-carrier Avianca has said that it is conducting an internal investigation into its relationship with Airbus and will cooperate with overseas authorities.
Austrian Defence Minister Klaudia Tanner said the country could terminate a 17-year-old deal to purchase Typhoon jets from the Eurofighter consortium, of which Airbus is a member, after the deal was highlighted in the US probe.
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Airbus anticipates further costs from tax and legal disputes of a “mid-to-high triple digit million-euro amount” this year, it said in an earnings statement last week. That’s on top of a 3.6 billion-euro hit from the January settlement.
Now that they’re in the public glare, “a number of airlines and countries have something to contemplate and to pursue should they decide it’s warranted”, said Jefferies International analyst Sandy Morris.
