Airlines may get to borrow overseas

The government will selectively allow local airlines to borrow money from abroad to repay debt taken in India, civil aviation minister Praful Patel said.
The move is part of several measures the government is adopting to help debt-ridden carriers. Funds raised via external commercial borrowings, or ECBs, cannot be used to repay Indian rupee debt.
Jet Airways (India) Ltd, the country’s largest airline by passengers carried, sought a relaxation from the Reserve Bank of India (RBI) for raising around Rs.3,000 crore through ECBs to repay its high-cost domestic debt.
“Some of it will be allowed,” Patel said on Monday on allowing Jet’s request. He did not specify the quantum or time frame for such a move. “Ultimately, it’s not a question of good or bad, right or wrong, if the sector is in (a) problem... It’s been done for cement, steel and many other sectors in the past. Why not for aviation?”
He pointed out that RBI has already granted airlines partial relief on restructuring their loans. Some of their debt will be converted into term loans or have moratoriums of two-three years, reducing the pressure on cash flows, he said.
21/09/10 Tarun Shukla/Live Mint

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Categories: Foreign Sep 2010, Indian Aviation- In General Sep 2010