Debt rejig: A breather for airlines

More than Rs 60,000 crore of debt and no scope for any dramatic improvement in the situation was the quandary Indian airlines were facing when they frantically looked out for a bailout.
Thanks to the improved confidence levels arising out of growing traffic, a debt restructuring plan has finally taken shape, providing a breather for the airline industry which has been gasping for breath due to its growing mountain of debt.
Interestingly, the recast will work in different measures for each of the major airlines, though it brings hope to them all. The Vijay Mallya-owned Kingfisher airline gets much-needed relief as it has been facing increasing pressure due to payment demands from various players including oil companies and airports.
For Jet Airways, which has one-fourth share of the Indian market, the situation is slightly different. The Naresh Goyal-owned airline has debt of over Rs 14,000 crore, but its short-term loans form only a small portion of the total loans.
The other big player in the Indian airline market, Air India, is a different kettle of fish.
In any case, Air India’s debt stands at around Rs 40,000 crore and only government intervention can make a difference.
07/09/10 G Ganapathy Subramaniam/Economic Times

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Categories: Indian Aviation- In General Sep 2010