Centre likely to help AI pare interest outgo on bank loans

New Delhi: The government may help the cash starved Air India restructure its Rs 16,570-crore loan from the public sector banks, following a request from the management for a government-facilitated swap of its high-cost debt with cheaper loan to help the airline cut losses.
The state-owned airline has borrowed over Rs 16,000 crore from banks to run its day-to-day operations and has another Rs 22,500 crore on its balance sheet borrowed from financial institutions to fund its fleet acquisition.
Nacil CMD Arvind Jadhav confirmed that the airline was looking for relief on its loan payments. “We have asked the government to restructure our debt and help convert short-term loan into long-term. This will reduce our cash outflow by Rs 500 crore annually,” he said.
The airline has an accumulated loss of over Rs 8,000 crore due to high fuel bill, low demand and cut-throat competition in the domestic market. The government has already approved a Rs 800-crore financial assistance to the national carrier by way of equity infusion to keep the airline flying.
“Around 16 public sector banks including State Bank Of India, Punjab National Bank, Central bank of India and Bank of Baroda have extended the loan to Nacil and are currently charging an interest rate of around 11-12%,” a government official said.
Bank of Baroda has the maximum exposure to Nacil at Rs 2,012 crore, followed by Punjab National Bank (Rs 1,930 cr), State Bank of India (Rs 1,090 cr) and Central Bank of India (Rs1,000 crore).
04/02/10 Dheeraj Tiwari & Nirbhay Kumar/Economic Times

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Categories: NACIL Feb 2010