Since the proof of the pudding is in the eating, one will have to wait to see how helpful is the lifeline thrown by the government to cash-strapped, loss-making airlines. The government has opened a one-year window for external commercial borrowings of up to $1 billion, with an individual airline limit of $300 million, for working capital requirements. In normal circumstances, the ECB route is preferred because it is a quicker and cheaper way of getting loans. But these are not normal times. Almost all airlines are running losses in five digits. The overall debt of the domestic airlines is `70,000 crore, of which Air India’s is `40,000 crore. The lenders would have to be very brave, with strong appetites for risk, to lend to such clients, especially since many of them owe crores to the Indian banks. It remains to be seen how many airlines can really avail of this helpline.
22/04/12 Asian Age
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