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As the lenders not showing much interest, Indian government-owned Air India has extended its $500-million bridge financing offer by one week to July 12. Air India is planning to raise the money to pay for the five Dreamliners, which are to be delivered beginning this month through December. The airline had extended the last date to July 12 from July 5, according to AI sources.

The deal is part of the 68 aircraft the carrier had ordered in January 2006, which includes 27 Dreamliners, 41 B-777s and B-737-800s from Boeing. Apart from this, the national carrier had also booked 43 planes from Airbus. So far, Boeing has delivered seven Dreamliners to the airline. Air India had on June 26 invited bids from banks and financial institutions to arrange bridge finance of up to $500 million to pay for five Boeing 787s, setting July 5 as the deadline.

A bridge loan is typically used to meet payment commitments until longer-term financing is arranged. Air India is seeking to raise the loan for six-twelve month period and plans sell and lease back these planes, according to the term-sheet. The airline says it will use the proceeds from sale and lease back to repay its loans. However, two days later, the management amended the bidding document by adding a new clause.

Selected bidder/s for bridge financing will have the right of first refusal for long-term financing or take-out financing under the sale and lease back clause, provided the selected bidder matches the terms and conditions of the lowest bidder for long-term financing, the amended document said.

This bridge loan facility will not be covered by government guarantee, therefore Air India will offer the planes or an equivalent as security, the document also said.