Saturday, March 26, 2016

Air India wants banks to take fresh haircut to turn a profit

New Delhi: Air India is looking for a restructuring of its loans from banks to reduce the interest burden and become profitable.
The national carrier - which has been in the red and has got several rounds of funding from the government - is looking to get the lenders to cut the interest rate on loans of Rs 10,500 crore, on which it is paying 10.1%.
"Debt restructuring is a must. Every year, Rs 4,000 crore goes towards debt servicing alone. But we will seek debt restructuring only after becoming operationally profitable either this fiscal or next. We have so far not begun the process of debt conversion," AI chairman Ashwani Lohani told TOI.
Backed by the sovereign guarantee, the loss-making public sector airline is able to access funds at a much lower rate than other players. For instance, banks typically charge two percentage points higher than the base rate. Currently, SBI's base rate is 9.3%.
Air India has loans of Rs 48,400 crore, including working capital and term loans of Rs 22,000 crore, aircraft-related debt of Rs 19,000 crore and Rs 7,400 crore that it had raised via non-convertible debentures (NCDs).
26/03/16 Saurabh Sinha/Times of India
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