AI seeks govt nod for tax-free bond issue

New Delhi: Debt-ridden Air India has sought government permission to issue tax-free bonds to finance its working capital requirements.
The airline has also asked for some sort of a guarantee from the government to improve its credit rating to obtain cheaper funds. In a presentation to the civil aviation minister Praful Patel the airline management recently said that the company needed equity infusion from the government to fund its fleet acquisition programme.
“The airline has asked the government to provide letter of comfort (LoC) in favour of banks and financial institutions to improve its credit rating,” a company official familiar with the development told ET. The government has cleared a proposal to give Rs 5,000 crore over the next three years as financial assistance to the ailing airline. Air India had asked for Rs 15,000 crore in the form of long-term debt and equity. Air India had placed orders for 111 new aircraft worth Rs 50,000 crore with Boeing and Airbus. It has, so far, received the delivery of 51 aircraft. The official said that the LoC would help the company to obtain working capital funds at lower cost.
The state-owned National Aviation Company of India (Nacil), which runs Air India, currently has a loan of over Rs 16,000 crore, part of which is high cost.
18/01/10 Nirbhay Kumar/Economic Times

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Categories: NACIL Jan 2010