Runway cleared for AI to get debt funds at low rates

Air India (AI) may get the much-awaited letter of comfort from finance ministry in a month. This will facilitate the cash-strapped AI to mobilise debt funds at low rates.
“At a time when we are struggling to borrow funds for monthly wage payments, the letter would not only make it easier to borrow but also enable us to mobilise debt funds at competitive costs. We would be able to save around Rs 500 crore a year on our interest payments,” the AI official said. AI interest out go annually has been pegged at Rs 2,518 crore.
“Aviation minister Vyalar Ravi has assured us that the letter of comfort would be ready in a month or so,” said the official on the condition of anonymity. Earlier, the letter was likely to be given in mid-April. Finance ministry has, however, asked the carrier to present its turnaround plan before issuing such letter.
Consultancy firm Deloitte and SBI Caps have charted out a turnaround plan for Air India. Under the plan, AI needs to restructure its debt of around Rs 40,000 crore by reducing interest cost, increasing in moratorium period.
AI chairman and managing director Arvind Jadhav had recently said that he would soon meet banks and Reserve Bank of India (RBI) officials to take up revamping the debt.
30/03/11 Parul Chhaparia/mydigitalfc.com

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Categories: Air India Mar 2011