Banks want sovereign guarantee from Air India for aircraft loan

New Delhi: National Carrier Air India’s financial woes continue as banks are not willing to give loan without a sovereign guarantee. Air India had floated a tender in May to raise $ 1.15 billion to refinance loans that funded the purchase of 21 Airbus SAS planes. But sources say that various banks told the Air India management that they won’t be able to provide the loan unless there is a sovereign guarantee from the government of India.
The last date for the tender was 21st June but now the date has been extended to the 16th of July. Currently Air India is paying an interest of 11% on the Airbus loan which it wants to bring down to 8%.The new board of Air India has asked the management to bring down the average interest rate on its total debt to 8% from the current 11%.Air India’s current long term debt for aircraft acquisition is a massive Rs 22, 500 crore and its working capital loan is Rs 17000 crore.
23/06/10 Sameer Hashmi/Economic Times

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Categories: NACIL Jun 2010