New Delhi: A government panel has agreed to provide sovereign guarantee to Air India’s debt obligations totaling Rs 19,000 crore towards aircraft loan repayments till 2020.
The decision was taken in a recent meeting of a group of ministers chaired by finance minister Pranab Mukherjee. The GoM was constituted to monitor the airline’s financial turnaround. “The panel has given its commitment that the government will guarantee Air India’s aircraft loan repayment obligations till 2020,” said a senior Air India executive present at the meeting.
Civil aviation ministry sources said the GoM decision would be place before the Cabinet for its approval. Air India, including erstwhile Indian Airlines, had ordered 111 planes worth Rs 44,000 crore in 2005.
The panel has also agreed to commit Rs 450 crore a year over the next 10 years to Air India as a soft loan to meet its working capital requirements. The cash-strapped airline has accumulated working capital loans of nearly Rs 21,200 crore and has not paid incentives to its employees for the last five months.
09/11/11 Indian Express
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