AI seeks $2.3-billion ECBs to pare debt

Air India has approached the government to raise $2.3 billion through external commercial borrowings (ECBs) as part of a plan to restructure its high-cost working capital debt.
Air India had also applied to the finance ministry late last month to provide it with a sovereign guarantee for the foreign loan. If cleared, the ECB will help it substantially reduce its ballooning debt burden.
"Raising money through ECBs will secure our working capital loans and help us reduce the interest burden on working capital loans by 3-4 per cent," said a senior Air India official, who did not wish to be identified.
Air India has a working capital debt of Rs 18,500 crore and pays Rs 1,800 crore as annual interest on this. A 3-4 per cent saving would translate into Rs 550-740 crore a year.
"We are not asking for any extra commitment from the government, as we have guarantees that can be used to bring down our interest cost," the official added. The airline has unutilised guarantees amounting to over $1.3 billion, meant for acquiring aircraft.
08/11/10 Business Standard/Sify

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Categories: Air India Nov 2010