Air India lenders to push govt for divestment, ease airline's debt

New Delhi: Air India lenders to push govt for divestment, ease airline's debt New Delhi: Despite huge efforts being made to save India's loss-making flagship carrier Air India (AI) from divestment, lenders and other stakeholders unsatisfied over its restructuring-turnaround plan for 2010-14 that envisages revenue enhancement and expenditure reduction in phases, will meet top government officials early in June to press for the airline's partial divestment.
Industry sources said the airline's promoters are also looking for a strategic investor, possibly an Indian entity for buying stakes in the carrier as foreign direct investment (FDI) rules do not allow foreign airlines to pick up stakes in Indian carriers.
The investors, who will be meeting civil aviation ministry authorities early this month, will negotiate regarding the airline's divestment as its total debt stands at over Rs 40,000 crore of which around Rs 20,000 crore is for working capital and the rest for aircraft purchases.
The working capital loan was raised from a consortium of 22 banks, with which the ailing carrier has been negotiating to restructure the loan. With the government reluctant to infuse more equity into the airline, the AI management has been persuading banks to convert a portion of its debt into equity and the remaining into long-term debt to help reduce its interest burden.
04/06/11 Sanjay Singh/Business Today

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Categories: Air India Jun 2011