Restructuring of AI's high-cost debt to be effective from Jan

Mumbai: The New Year is expected to bring cheers to Air India. The restructuring of the government carrier’s high-cost debt of Rs 19,000 crore would come into effect in January as the Reserve Bank of India (RBI) and various public sector banks have already cleared it. Besides, the Centre is expected to provide a guarantee for the restructuring exercise.
The civil aviation ministry had approached the finance ministry with a plea to infuse additional equity of Rs 2,000 crore, over and above an earlier one of Rs 1,200 crore. This is expected to give AI adequate strength to negotiate with the oil companies and airport operators and get some discounts. These decisions were confirmed by civil aviation minister Praful Patel while talking to Business Standard after the launch of sea plane operations of Pawan Hans Helicopters here.
“The restructuring of high-cost working capital debt has been cleared by RBI and other banks. Besides, AI will get a moratorium of two to three years in repayment of loans. There will be at least 3-4 per cent reduction in the annual interest payment of Rs 1,800 crore. The restructuring of debt will come into effect from next month,” Patel said, adding that this would ease AI’s liquidity pressure.
On providing government guarantee, Patel said the ministry has already forwarded proposals in this regard to the finance ministry. “Decision is expected soon,” he said. On additional equity infusion of Rs 2,000 crore, the minister said he had already spoken to the finance minister.
28/12/10 Sanjay Jog/Business Standard

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Categories: Air India Dec 2010