Finance ministry seeks clear plan on Air India debt recast

New Delhi: The finance ministry has asked for a concrete financial restructuring plan from Air India.
In a meeting with the airline’s top brass and officials from the Ministry of Civil Aviation on Tuesday, finance secretary Ashok Chawla sought details on the restructuring of the debt being raised on government guarantees for the carrier’s ambitious aircraft purchase plan.
According to sources, the national carrier’s aircraft purchase debt amounts to $10 billion, of which $7 billion or about Rs 32,200 crore is secured through government guarantees.
“We have to devise ways of bringing down the government guarantees and borrowings against these guarantees. We will have to renegotiate with a clutch of lenders, including the Exim Bank of US and a consortia of Indian banks, to get much lower interest rates on the $7 billion .... some of Air India’s loans are over guaranteed,” official sources said.
Of this $7 billion, about $5 billion has already been secured, but perhaps not at the best rates of interest. The airline plans to purchase 68 aircraft from Boeing and another 43 from Airbus.
While the former order is worth about $7.5 billion, Airbus planes will come for a little over $2 billion.
14/07/10 Sindhu Bhattacharya/Daily News & Analysis

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Categories: NACIL Jul 2010